Newsom proposes $420M new subsidy for Hollywood amid California budget cuts

(The Center Square) - California Gov. Gavin Newsom announced his plan to more than double the state’s tax credits for film and television, aiming to raise the refundable credit by $420 million. The state’s own studies have found half of the projects that apply for but don’t get film subsidies end up staying anyway.

“California is the entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent,” said Newsom in a statement on his proposal to expand the credit to $750 million per year. “Expanding this program will help keep production here at home, generate thousands of good-paying jobs, and strengthen the vital link between our communities and the state’s iconic film and TV industry.”

In 2023, Newsom made the program a refundable credit, meaning that if the credits exceed owed taxes, a recipient gets cash from the state.

“The massive increase to the program, which is administered by the California Film Commission (CFC), would allow California to outpace other states offering tax credits, luring more entertainment industry projects back to the Golden State,” wrote the Governor’s Office of Business and Economic Development.

While the modern film industry has its roots in California, the majority of states now have film and TV subsidy programs to lure productions out of the Golden State. However, analysis from both conservative and progressive think tanks suggests that these programs often have low rates of return, and result in a costly, taxpayer-financed arms race to the bottom.

“Peer-reviewed studies are unanimous that the incentives do not spur economic growth, nor do they create a sufficient number of jobs to justify the cost,” Professor Michael Thom of the University of Southern California told The Center Square in an earlier interview. “As California's budget deficit balloons, taxpayers can scarcely afford to subsidize television shows.”

Having narrowly closed a $47 billion budget shortfall this year and economic prospects growing darker, it’s unclear how Newsom plans to pay for the the program’s $420 million expansion.

Some felt left out by Newsom’s decision, amid major cuts to other programs, to focus on growing cash assistance for Hollywood.

“Governor Gavin Newsom is giving 2x more to the Hollywood elites than he cut from preschool programs for kids with disabilities,” said Assemblyman Joe Patterson, R-Rocklin, on X. “It seems his priorities are the rich and famous, not the ‘rest of us.’”