Prioritize People Over Hollywood: Alternatives to Expanding the Film Tax Credit

July 2, 2014

Last week, lawmakers moved forward legislation that could expand California’s film tax credit. The bill — AB 1839 — may end up like much of Hollywood’s output these days: a reboot of an old idea, but with a much bigger budget. The current film tax credit allocates a total of $100 million annually to companies that make movies or television shows in California instead of outside of the state. Some proponents now argue that the state’s tax credit should offer up to $400 million annually, which would make the credit four times as large.

This proposed expansion of the film tax credit comes at a time when policymakers are prioritizing fiscal austerity over investments in workers and their families. Despite the good intentions of promoting job growth, film tax credits fail to generate the economic or budgetary benefits needed to justify their upfront costs.  Moreover, the suggested $400 million price tag could instead provide essential funding for the kinds of programs that California families need today. For example, policymakers could use these dollars to:

  • Significantly expand access to affordable child care. California could increase the number of childcare and preschool “slots” by 40,000 at the cost of approximately $300 million, according to the California Legislative Women’s Caucus. This would mean additional and much-needed support for working parents through affordable and safe child care and preschool options.
  • Provide additional support for California’s renters.  Each year, over 1 million taxpayers claim California’s renter’s credit, which offers a small nonrefundable tax credit to eligible renters. In 2012, the total cost of this credit was $106 million. At a time when housing costs are a significant burden for families, this program could be significantly expanded to reach more renters than it currently does.
  • Ensure access to Medi-Cal services.  California recently implemented a 10 percent cut in Medi-Cal payments to doctors, dentists, and other providers. This rate cut could discourage health care providers from participating in Medi-Cal and potentially hinder access to critical care.  The Assembly Budget Committee estimates that repealing this cut would cost $312 million in 2015-16.

These are just a few examples. If AB 1839 passes and is signed into law, it will be a discouraging display of misplaced priorities. The latest budget agreement made only modest progress in reinvesting in the public systems and services that were battered by cuts in prior years, and now is not the time to implement costly and ineffective policies.

—  Luke Reidenbach