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California lawmakers are weighing whether to remove the $750 million cap on the state’s film and television production tax incentive. The debate, which began at an Assembly committee hearing in North Hollywood on Thursday, highlighted deep concerns about the ongoing loss of production jobs to other states and regions.
Productions Leaving California Despite Incentives
Betsy Beers, the creative partner of producer Shonda Rhimes, told the committee she had planned to film a new “Grey’s Anatomy” spinoff in Santa Clarita. However, the show did not receive a California tax credit. As a result, production moved to Albuquerque, New Mexico.
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“We lost a lot of time, and a lot of money, and now we are filming in Albuquerque,” Beers said. “We want to be here.”
Because the state program is capped, productions must apply during specific windows and compete against other projects using a “jobs ratio” score. Beers said the spinoff initially scored too low to qualify. When ABC applied again in the fall, the program was already oversubscribed and had closed to new applications.
FilmLA, the regional permitting agency, reported last week that overall production volume in the Los Angeles area continues to fall. This decline persists even though the share of scripted TV shows receiving a state subsidy has nearly doubled.
Calls to Remove the Cap Entirely
Several speakers at Thursday’s hearing called for eliminating the $750 million ceiling altogether. They argued the cap creates uncertainty and discourages productions from committing to California.
“The program is still not competitive or predictable enough to address the loss of production to other regions,” said Arlen Valdivia, vice president of state government affairs at the Motion Picture Association. “There needs to be more done to make California competitive.”
By comparison, Georgia’s film tax credit has no cap. New York allows the state to draw from future-year allocations, which effectively makes its credit uncapped as well.
Rick Chavez Zbur, who chairs the Assembly Select Committee on Growing and Retaining the Creative Economy in California, said he plans to push for changes in the next legislative session. “I want to try to do our best to make whatever changes we can — either increasing the cap or eliminating it,” Zbur said after the hearing. “But you know that is a heavy lift.”
Budget Pressures Complicate the Debate
California lawmakers are also managing a structural budget deficit and deep cuts to Medicaid. These pressures have intensified competition for available tax dollars.
During the hearing, Zbur raised the idea of “dynamic scoring.” This approach would require the state to account for economic returns generated by the film credit, rather than focusing solely on its upfront cost.
However, Rowan Isaaks, an economist with the state Legislative Analyst’s Office, expressed skepticism. He cited research showing film credits return between 20 and 50 cents for every dollar the state invests. “It’s subject to a lot of uncertainty,” he said of dynamic scoring.
In contrast, Stephen Cheung, president of the Los Angeles Economic Development Committee, cited his own group’s research showing a return of $1.07 to state and local coffers. That report was funded by the Motion Picture Association.
Additional Proposals on the Table
Assemblyman Nick Schultz suggested extending the program’s expiration date, currently set for 2030, to give productions greater long-term certainty. He and other lawmakers also proposed expanding eligibility to include commercials and game shows, and adding subsidies for above-the-line costs such as actor and director salaries.
California raised its base film credit from 20% to 35% last year and increased the overall cap from $330 million to $750 million. Since then, the Legislature has added a $10 million post-production incentive and passed measures to speed up studio rebates.
While Congress is considering a 20% nationwide film incentive, several speakers warned that federal action alone would not solve California’s competitive challenge. “We should not assume the work will return because federal policy changes,” said Lindsay Dougherty, leader of the Hollywood Teamsters.
