LOS ANGELES (The Hollywood Reporter) — Stung by criticism, California state Assembly Speaker Fabian Nunez and Sen. Kevin Murray insisted Aug. 24 that their proposed production incentive was more about preserving middle-class jobs than enriching Hollywood’s top producers.
Critics have pounced on the estimated $50 million outlay since its unveiling the previous week, claiming that it amounted to “corporate welfare” when basic social services are being cut.
The two Los Angeles-based Democrats, in a conference call with editorial board writers and other journalists, said the detractors have missed the point about AB 777, which enjoys strong support from the industry and Gov. Arnold Schwarzenegger.
“Those who will benefit mostly by this are those independent movie producers who really are operating on very very thin margins,” Nunez said. “Really what this is about is stabilizing the middle-class workforce in California.”
Added Murray, “We’ve been relatively arrogant about keeping this business, and other states have started to clean our clock. This is the industry by which the world sees us most, and it’s something we want to keep.”
The lawmakers are hoping to rush the bill through committee and to the governor’s desk by the end of the session Sept. 9.
The 12% tax credit against wages and qualified production costs seeks to “even the playing field,” in the lawmakers’ view, so that producers who naturally would stay in California and tap its skilled workforce will not have to rely on incentives from other countries or states such as Louisiana, New Mexico and New York.
Producers would be required to do at least 75% of principal photography in California and can’t apply more than $25,000 of an actor, writer or director’s salary to the credit. On the upside, they could amass as much as $3 million in credits and cash out whatever is left after all tax obligations are satisfied.
The refundable nature of the credit has raised concerns among taxpayer advocates, as has the extent to which the program can be held accountable.
Murray said there are numerous safeguards, including the simple fact that the financial benefits only come after a production has created jobs.
“I’m confident that we will see a return on our investment immediately,” Nunez said. “Every year we’re forced to live within the means of whatever state revenues we have, and I don’t want to keep cutting up that pie. I want to look for ways to grow the general fund in California, and I’m very confident this will do it.”
It is especially important to act now before other states build the infrastructure and workforce to solidify their production base, Murray said. “Frankly, we want to nip some of that in the bud as early as possible,” he said.
As to the criticism, Murray and Nunez scoffed at one pundit’s claim that they were beholden to the donations of their Democratic supporters in Hollywood. Murray, for one, said Hollywood donations are “really paltry” compared with those of other California industries.
“The opposition never really comes out of the woodwork until they know you might actually get something,” Murray said.
Added Nunez, “We’ve taken a little heat, but that’s the price of leadership. We think we’re doing the right thing.”