Senate Pro Tem De León to Hollywood Chamber: New and Improved Film & TV Tax Credit Program Keeping California’s Economy Strong

Friday, August 12, 2016

HOLLYWOOD – Programs like California’s Film & Television Tax Credit 2.0 are contributing to the state’s robust job creation and GDP growth that’s outpacing the rest of the nation, Senate President pro Tempore Kevin de Leon (D-Los Angeles) said today in a keynote address to the Hollywood Chamber of Commerce.

“We’ve weathered a global financial crisis and come back even stronger than before,” said Senator de León at the Hollywood Chamber’s second annual State of the State Luncheon hosted by Paramount Studios.

In its first full year, the “new and improved” tax credit program – negotiated by Senator de León and passed by the Legislature in 2014 – selected 55 projects that are estimated to generate $1.5 billion in direct in-state spending. This includes $600 million in wages to nearly 15,000 below-the-line cast and crew members. In the latest round of allocations, the 28 film projects selected are expected to generate $880 million in direct-in-state spending, including $326 million in wages to more than 5,900 cast and crew members.

Senator de León played a central role in retooling the tax-credit program to emphasize job creation and increasing available annual tax credits from $100 million to $330 million. It also replaced a lottery-system selection process with criteria based on job creation and stimulation of local economies.

“These are good-paying jobs we are bringing back and keeping in our state,” Senator De León told the chamber.

To ensure Los Angeles remains a “thriving, world-class city,” Senator De León said the passage of Measure M on the November ballot is critical to ensure funding for continued improvements to the county’s transportation and public transit systems – like the recent opening of the Expo Line to the ocean. Senator de León passed legislation last year to enable a vote on Measure M.

He also credited the Legislature and Governor Brown for taking the issue of homelessness “head on” with the passage of the Senate’s bipartisan “No Place Like Home” initiative to generate $2 billion to house the chronically homeless.

Senator de León also highlighted his legislation to help Los Angeles land the Olympic Games in 2024 and the economic punch the games will bring to the region and state.

Remarks as prepared for delivery:

Thank you so much for the tremendous honor of speaking to the Hollywood Chamber. Let me express my gratitude for the awesome privilege of addressing each and every one of you. A very special “Thank You” to Paramount for having us here today.

Hollywood has a special place in California lore. Our film and television industry has been capturing imaginations across the world for over a century. The work produced in studios like this one has helped to build the legend of the Golden State while also contributing to our economic prowess.

Today, if Los Angeles County were a nation, we’d be part of the G20! And Hollywood has long played a starring role in that success. But of course, there’s a lot that goes on behind the scenes that makes the entertainment industry work. They say it takes a village to raise a child. It also takes a village to make a quality film or TV production, or to build a successful business.  It takes hard work and investment across a wide range of industries, from construction and transportation, to our restaurant and service industries, our police and first responders, and so on.

Creating an environment where our businesses can thrive also requires a strong, unified voice in the public policy process. That’s where the Hollywood Chamber comes in. The Hollywood Chamber has been hard at work building this village, fighting for the needs of the local business community for over 95 years. This Chamber has been a tireless advocate, leading the way in revitalizing this community, and bringing back good paying jobs across every industry.

As the first Pro Tem from Los Angeles in the last two decades, I’m extremely proud of our city and grateful for everything you do to keep our region thriving. In my capacity as leader of the Senate, I’m committed to working with you to protect and build on this success. And so far, we’ve been able to accomplish some very positive things for Hollywood, for LA, and for our great state.

With the new and improved film and TV tax credit that we passed in 2014, we are reclaiming our mantle as the entertainment capital of the world. With the sheer scale of our commitment to the industry, we’re outcompeting states like Florida and North Carolina. Both states dropped their programs after we overhaul ours. We’ve made it clear that no one – and I mean NO ONE – is going to out-compete us. And we’re seeing results.

In its first full year, the revised program awarded $230 million in tax credits to 55 projects. These projects are estimated to contribute a total of $1.5 billion in direct in-state spending. That includes $600 million in wages for nearly 15,000 below-the-line cast and crew.

And the program is going strong in year two. In fact, 28 film projects were selected by the California Film Commission in the latest round of allocations, including 18 from studios and 10 independent productions. They will share $109 million in tax credits, while generating an anticipated $880 million in in-state spending, including $326 million in wages for more than 5,900 cast and crew members. Several projects, such as Friday the 13th, will take place right here at Paramount.

The latest recipients also include Disney’s adaptation of A Wrinkle in Time, which I’m happy to say is being directed by a woman – and a woman of color at that! That film alone is expected to create hundreds of jobs and tens of millions of dollars of revenue for Southern California. And its producer, Jim Whitaker, specifically cited the new tax credit program as having made it possible to film here.

These are real jobs we are bringing back and keeping in our state; families that are reuniting or staying together. It also means more business for mom and pop shops across our region. The Hollywood Chamber was instrumental in bringing these jobs back. Thanks to all of you for your hard work in getting this done.

I’m also looking forward to working with all of you to bring the Olympics back to Los Angeles in 2024. This session I’ve partnered with Assembly Speaker Anthony Rendon to author SB 1465, which will provide the necessary financial security to ensure the games can go forward. The Olympic Games will allow us to showcase our city, and are expected to bring significant financial benefits to both Los Angeles and the State of California. We feel incredibly confident that the protections set in place will ensure another successful and profitable Olympic Games.

In the meantime, I’m focused on ensuring Los Angeles remains a thriving, world-class city. And an important part of that is improving our public transit and highway systems. I’m proud of the progress we have made together so far. We’re turning the “car capital” of the world into a much more transit-friendly place and cleaning up our air in the process. We finally have a rail line, the Expo Line, to connect Angelenos to our beautiful Pacific coast. The Gold Line expansion also launched this year, and the Crenshaw Line is expected to be completed in 2019.

This November, voters will decide on Measure M, formerly Measure R2, to provide badly needed funds to continue this progress.  I was proud to carry legislation last year to enable this vote to take place, and I hope we can work together to pass this important measure.

Another important issue facing our city and our state is homelessness. Unfortunately, Los Angeles is the homelessness capital of the nation. In Los Angeles County alone, we have 40% of the California’s homeless population. Many are mentally ill, and far too many are veterans who have served our nation. This is a fundamental economic, public health, public safety issue. It impacts families, businesses, cities and counties in every part of California. And it’s becoming more costly and prevalent. The cost of medical and social services for unsheltered homeless individuals can be as high as $100,000 per person per year. Last year alone, Los Angeles spent $100 million on services such as jail, law enforcement and emergency room visits. And yet, none of those expenditures went towards housing. We can find smarter and more compassionate ways to address this challenge.

I’m extremely proud that this year, California took the issue of homelessness head on by passing the Senate’s No Place Like Home initiative. In June, Governor Brown signed the program into law. We now have $2 billion for construction or rehabilitation of thousands of new units of permanent housing for our most vulnerable homeless populations.  It’s the boldest plan of its kind anywhere in America for Californians who are suffering from homelessness. By taking a “housing first” approach, we allow wrap-around services such as mental health care to take hold. This approach is not only more compassionate, but it’s also been shown to be more cost-effective. This is by no means a silver bullet, but it will go a long way towards solving the problem.

It has been a remarkable year for the Legislature, and I want to take a moment to reflect on some of our accomplishments. From the beginning, I pledged to tackle the peoples “To-Do List” and build on California’s progress. By any objective measure, this legislature has expanded the winner’s circle to enable more hard-working Californians to enjoy the fruits of opportunity and prosperity.

With the budget we passed in June we also secured significant victories for higher education, the developmentally disabled, childcare, and more. We added over 7,000 new slots for California residents at the UC and the CSU, bringing the two year total to over 20,000 new ongoing slots. These new slots will help us close the projected “skills gap” of 1 million additional Bachelors’ degrees our economy will demand by 2025.

Not only did we expand access to our public universities, we also strengthened the high-school to college pipeline for students from low-income backgrounds. SB 1050, which we passed through the budget, will ensure that students of all backgrounds graduate from high-school ready to succeed in higher education, including at our flagship institutions.

We also achieved historic legislative victories.  We took on the NRA and passed the most far-reaching gun control legislation in a generation. For the first time, California will regulate the sale of ammunition, which is the oxygen that fuels the gun violence epidemic.

We took on Tobacco and raised the smoking age to 21, to prevent a new generation of children from falling victim to addiction. We passed a $15 minimum wage to ensure no one who works full time has to live in poverty. We’re doing all of this while maintaining fiscal responsibility and investing in a Rainy Day Fund. And we still have a lot of work to do in the coming weeks.

We have to build on our progress to clean up our air and transition to clean energy sources. Last year we passed the most ambitious clean energy targets in the nation with SB 350. By 2030, we’ll get half of our electricity form solar, wind, and other renewable sources, while also doubling the energy efficiency in our homes and businesses. Now we need to extend our AB 32 emissions reduction goals to ensure we continue to lead the nation and the world in clean energy innovation.

I’m also pushing to reform the South Coast Air Quality Management District to ensure it upholds its mission. The South Coast air basin – which includes Los Angeles, Orange, San Bernardino and Riverside Counties – is among the most polluted in the nation.  The region consistently fails state and federal air quality standards. Every year, in our region alone, 5,000 people die prematurely due to bad air quality.

Clean air should not be a partisan issue and it shouldn’t be a wedge between business and environmental communities either. This is about quality of life. LA’s industries can thrive economically while also doing their part to clean up after themselves.  And the communities that are most impacted by dirty air should at least have a seat at the table. I don’t think that’s too much to ask.

One other item that may be of specific interest to you is SB 734. The bill will streamline the environmental review process for large development projects that meet high environmental and labor standards. I’ve been working closely with the bill’s author to ensure it respects local control while also encouraging job creation, affordable housing, and new business opportunities. It will limit the abuse of CEQA and ensure that good projects are not stuck in the slow lane of our judicial system. It’s a balanced and pragmatic approach that can keep our economy moving forward without compromising our values.

In closing, it is my firm belief that the State of our State is strong. The nation looks to California for leadership on so many issues – from our pioneering policies on climate change and gun control, to our private sector innovation.  

I’m filled with optimism about the progress we are making together and what lies ahead. We’ve weathered a global financial crisis and come back even stronger than before. We’ve lead the nation in job creation for two years running. In fact, last year, we added more jobs than #2 Texas and #3 Florida combined. We’ve had multiple consecutive years of balanced budgets, and we’ve made prudent investments in reserves.

We are today the 6th largest economy on the planet. Our GDP growth rate in 2015 was five times faster than that of Japan; twice as fast as Germany’s; three times as fast as France’s; 50% faster than that of the UK; and 30% faster than the United States as a whole.

The popular narrative that we’re taxing and regulating our businesses into extinction is just not accurate – it’s not borne out by the facts. The rumors of our demise have been greatly exaggerated.

But despite this progress I know we can always be better. I know that more government is not always the solution. As lawmakers, we must develop strategies to facilitate private-sector solutions rather than always relying on government programs.

As Californians, we don’t give up on people; we help them. We fight for them. And that is the approach I’ve taken in the Senate. When women earn less than men doing the exact same work, we didn’t back down. We leveled the field by passing the toughest equal pay law in the nation. I’m going to make people’s lives better, because that’s what I do as the leader of the Senate. And that’s what we do as Californians.

I want to continue to work with the Chamber and all of you to address many other issues facing our state and your businesses. I am proud to partner with each and every one of you in pushing our state forward. Thank you for the opportunity to be with you today.