Gov. Gavin Newsom on Sunday unveiled a proposal to more than double the annual amount allocated to California’s Film and Television Tax Credit program, as Hollywood struggles to compete with other production hubs who hold out noble incentives.

The governor said he plans to expand the annual tax credit to $750 million from the current $330 million, which would make California the top state in capped movie incentive programs, surpassing even New York. If approved by Parliament, the increase could come into effect as early as July 2025.

“California is the entertainment capital of the world, rooted in decades of unparalleled creativity, innovation and talent,” Newsom said in a statement. “Expanding this program will help keep production here, generate thousands of good-paying jobs, and strengthen the vital connection between our communities and the state’s iconic film and television industry.” »

The announcement comes as Newsom and other elected officials face increasing pressure to act as Hollywood production struggles to rebound from the pandemic and last year’s twin strikes by writers and actors.

Productions are increasingly choosing to film in other states because of higher tax incentives, putting a damper on California’s iconic film and television industry. Underscoring the state’s competitive disadvantage, about 71 percent of projects rejected by the California Film and Television Tax Credit program chose to film out of state, the governor’s office said.

from California film and television tax credit program was created in 2009 to prevent film and television production from fleeing to other states. At the time, credit was limited to $100 million per year.

Five years later, the roof was raised to $330 million per year, giving studios tax credits of up to 25% to offset eligible production costs such as set construction, stage equipment, stunts and crew member salaries. The credit can be applied to all corporations subject to tax in California.

In 2023, Newsom extended this version of the program for another five years and added a “refundable” feature allowing studios to pay in cash from the state when their credits exceed their tax bills.

Although Newsom’s proposal Sunday would represent a substantial increase in funding, it does not remove other restrictions from the state’s incentive program, including a provision that excludes actor salaries and other outsized costs that represent a large part of the film budgets. . Georgia and other rivals face no such restrictions.

But such a move is considered politically untenable in California, where the movie incentive program faces opposition from critics who say subsidizing entertainment comes at the expense of other worthy causes, such as education and health.

Members of the Los Angeles entertainment community recently urged the government to inject more funds into the film and television tax credit program to curb so-called runaway production and boost employment.

As the Times previously reported, industry professionals and experts overwhelmingly agree that relatively weak incentives are the main reason California is losing ground to Georgia, New York , Canada, the United Kingdom and other filming hotspots around the world.

New York State’s Film and Television Tax Credit program, for example, is capped at $700 million; and Georgia – a popular production destination for Marvel and Netflix – has no limits.

“I believe the best filmmakers in the world are here in Los Angeles, but they’re being outsourced because of tax credits,” Mike DeLorenzo, president of Santa Clarita Studios, told the Times last month.

The weak activity in Southern California has also been fueled by other factors, including a general decline in production that peaked during the streaming wars and cost cutting by major media companies.

Earlier this month, The Los Angeles Film Permit Office reported FilmLA that production levels in the region fell 5% in the third quarter of 2024 compared to the same period in 2023, when script production came to a virtual halt due to Hollywood strikes.

Times Staff Writer Stacy Perman contributed to this report.