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Last month, California Governor Gavin Newsom came to Los Angeles and announced a long overdue change to the state’s tax credit program for film and TV production. The state would allocate $750 million of tax dollars — up from $325 million — to film productions in an effort to keep filming in California.
Scott Budnick, an appointee of Newsom’s and a producer known for “The Hangover,” said at IndieWire’s Future of Filmmaking Summit over the weekend that Newsom announcing his budget plans in October ahead of the full budget in January is “pretty unprecedented.”
“He was very, very concerned and understood the urgency and the emergency of the moment and knew he had to do something immediately,” Budnick said on a panel discussion titled “Filming Outside Hollywood: Challenges, Opportunities, and Passports,” presented by United for Business.
Budnick was joined by FilmLA President Paul Audley and Entertainment Partners’ Sarah Westman-Liu to explain the bigger picture challenges facing the entertainment community in Los Angeles, in California, and across the U.S. more broadly.
Audley recently shared research from FilmLA that showed in the summer of 2024, film production was even lower than it was when the industry was on strike back in summer 2023. It’s the most alarming number in a long trend of production leaving Los Angeles and moving to Georgia, Canada, or overseas.
“The state of California broadly had this image that the film industry couldn’t leave because it was headquartered here, which is a really stupid way to look at the industry. Just because the executives of Disney and Warner Bros. live here doesn’t mean they produce here,” Audley said on the panel. “It used to be called ‘Runaway production, and I changed it to ‘Ran-Away,’ to force the issue that it’s gone and it’s going in that it’s gone and it’s going, and they have to start waking up, it’s not preventing it from leaving.”
Westman-Liu illustrated how these other film markets have been able to both build up their infrastructure and over time make their locations more attractive to studios and producers. While Georgia does not have a cap on the amount of incentives the state can offer film projects, it’s not just the dollars.
Other jurisdictions allow productions to qualify above-the-line talent to receive tax credits, something that’s not available in California. What’s more, European countries are offering incentives built into the tax code on the national level, so producers don’t have to worry that a state will slash the amount of the film incentive once the next budget arrives.
“As soon as you cross the border, U.S. producers are dealing with an extremely favorable exchange rate, coupled with also that Canada is a lower labor cost country. So right off the bat, there could be a 20-30 percent savings in the overall production budget, and that’s even before the incentive,” Westman-Liu said.
Budnick pointed to the rise of Netflix productions in Colombia, where he said the same project can be budgeted there at $4.5 million compared to $23 million in the U.S., and that while they don’t have the soundstages, they have the crews necessary to make your project.
Such savings are hard for filmmakers to pass up, so Budnick said the workers living in Los Angeles and California need to step up to make sure filming in the Golden State is as attractive as possible.
“This is the call to action, motherfuckers, pay attention,” he said to the crowd.
Budnick has helped pass 32 different bills in the California State Legislature. He knows how to “get shit done” in Sacramanto. But the tax credit has been stuck in the mud for the last 10 years because legislators “never get the real glimpse of what this business looks like.” They see white male studio executives pleading their case, and not the diverse group of below-the-line talent explaining why such benefits are so crucial.
“I don’t want to give a tax credit to all these fat cat studios and all these male, pale, and stale workers that are coming up here that have been in the union for 40 years,” Budnick said of the legislators. “They don’t look like my constituents. And that’s a problem.”
He says people of all stripes and ethnicities need to be up in Sacramento walking the halls and talking to congressmen, and he’s prepared to help coordinate these meetings every week between January when the budget is announced and until June when the congressional session is over.
“More than anything, if you want to win this, you need workers,” he said. “You need the people that are on the ground who are having to mortgage their homes or foreclosing on their homes because they can’t find work right now, to be up there talking about why they joined this business, what their life was like, and what is happening right now.”
Newsom has proposed an expansion of the program to $750 million, but Budnick says it will take grassroots political effort to make sure that number stays there and doesn’t get cut down further and that lawmakers understand why such tax credits are a priority.
“There’s the ability to do more,” he said. “There’s a lot more that needs to happen other than just the number to make us unbelievably competitive and to have studios say we want to stay here, we need to stay here.”
Watch IndieWire’s full “Filming Outside Hollywood” panel above.
Special thanks to our Future of Filmmaking Summit partners: Canva, Kino, SAGindie, The American Pavilion, United for Business, and The Walt Disney Studios.