eager to talk A measure taken off the 2024 ballot It would make it harder to raise taxes, and unions charge that the initiative would end a California program that provides hundreds of millions of dollars each year in tax credits to television and film studios.
The claims are part of an effort by unions to increase pressure on business interests that support the measure to reach a deal to remove the proposal from the November ballot, which is likely amid a round of intense negotiations at the California State Capitol. If concerns about the tax credits take hold, movie studio executives could be a powerful addition to the opposition campaign.
Losing the film and television tax credit would be particularly damaging as the motion picture industry struggles to recover from the covid-19 pandemic, Two major attacks And Ongoing contraction in the industry,
“This thing has the potential to devastate our industry and the jobs that support it, as well as the jobs of the people who work in this industry,” said Thom Davis, president of IATSE, the California Council for Hollywood crew members union.
So far, no film studio has joined the opposition campaign led by the Service Employees International Union California, the California Teachers Association, the Northern California Regional Council of Carpenters and the State Building and Construction Trades Council of California.
Warner Bros. Discovery and a lobbyist for the Motion Picture Association declined to comment. The Times contacted several other major studios for comment on Tuesday, including Disney, NBCUniversal, Sony, Paramount and Netflix.
The California Business Roundtable, a supporter of the measure, rejected the union’s claims. The business organization said the film credit is a tax cut, not an increase, and would not be affected by the ballot initiative.
“We’ve been waiting for weeks for these types of intimidation and bullying tactics to happen,” said Rob Lapsley, chairman of the roundtable.
Removing the Taxpayer Protection and Government Accountability Act from the November ballot is a top political priority for labor unions and Democrats, who fear voters will support the proposal and tip the balance of power in Sacramento.
The proposal put forward by Lapsley’s group and the Howard Jarvis Taxpayers Association deprives the state Legislature and governor of the ability to increase taxes without statewide voter approval. The measure could limit state and local funding and make it more challenging for the governor and Legislature to raise money for new programs or respond to the economic crisis without sacrificing their own policy agenda.
Keeley Bosler, the former director of the California Department of Finance who is working with the opposition campaign, said the measure would “negatively impact the government’s ability to invest in the services and infrastructure that the state of California and Californians need to meet all of the challenges ahead,” such as climate change, an aging population and the rise of artificial intelligence.
Gov. Gavin Newsom and Democratic state lawmakers petitioned the California Supreme Court to intervene last September, arguing that the change amended the California Constitution and should require a two-thirds vote in the Legislature to appear on the ballot. Oral arguments on the case were heard in May and could decide to remove the measure from the November ballot.
Advocates for the supporters and opposition campaign disagree on whether the measure would have any effect on film and TV tax credits.
The bill requires voters to vote on all fee increases from local governments, which can now be administratively approved. The threshold for increasing local special taxes would increase from a majority of the people to a two-thirds vote.
Fee increases at the state level, which are often approved by state agencies and boards, would require support from a majority of the state Legislature. The ballot measure would also expand the requirements needed for statewide tax increases, which currently can be done by a two-thirds vote of the Legislature. Under the measure, support from a majority of California voters would also be required.
The measure expands the definition of taxes and limits the potential use of fees to only covering the cost of service, potentially preventing the government from redirecting revenue to other purposes.
Opponents say California’s film and TV tax credit program — Which will undergo significant changes in 2023 — could be in jeopardy because of a provision in the proposed ballot measure that states “any change in state law that results in a new or higher tax being paid by a taxpayer” must be passed by at least two-thirds of the Legislature and approved by a majority of the people.
A retroactive clause stated that “any tax or exempt fee adopted after January 1, 2022 but before the effective date of this Act” that was not implemented in accordance with the above rules would become void one year after the measure’s passage “unless the tax or exempt fee is reimplemented in compliance with the requirements.”
Critics have interpreted those passages as meaning that Senate Bill 132 — a 2023 law extending California’s film and TV tax credit by five years and adding a new “refundable” feature that allows some studios to qualify for direct payments from the state — would be overturned if the ballot measure passes in November. SB 132 isn’t scheduled to take effect until 2025, so the opposition campaign is sounding the alarm about future funding for the tax credit program.
Unions have begun sounding the alarm in the final stages of budget talks at the state Capitol. Newsom and Democrats are negotiating among themselves, with unions and other interest groups about raising the minimum wage for health care workers to $25 an hour and freezing tax credits for businesses to close California’s $45 billion budget deficit.
These conversations are tangled up in talks about 2024 ballot measures. Under state law, supporters have the ability to withdraw their measures from the ballot before the June 27 qualification deadline. Lapsley said he is open to negotiating with opponents about provisions of his measure, but that has not happened.
“We’ve said very clearly that whoever wants to sit down and have a discussion, we will respect that,” Lapsley said.
But Lapsley also remains adamant about the necessity of his proposal.
“The importance of the (Taxpayer Protection and Government Accountability Act) to the statewide business community as a long-term check and balance against a progressive Legislature with a permanent two-thirds majority is far greater than any individual element that they’re talking about at the moment,” Lapsley said. “So that’s our view on it, and that’s why we continue to move forward.”
The measure’s potential impact on film tax credits could be a compelling argument for unions.
California currently awards about $330 million a year to dozens of entertainment companies that film in the state — a figure that is relatively small compared with the more lucrative tax programs offered by production centers in other states and countries that compete with Hollywood for business.
Industry insiders and experts have cited the weakness of California’s tax credit program as one of several reasons film and TV production is declining in the state. A recent report from Otis College of Art and Design found that the share of domestic film and TV employment in Los Angeles is 20%. 8% decline last yearThey are losing ground to rivals like Atlanta and New York.
Davis said repealing SB 132 in its entirety would cause “absolute devastation” for the local entertainment community. Members of the Hollywood crew he represents already hurt badly Due to last year’s work stoppage and slow return to production.
“California would no longer be able to compete,” Davis said.
“The recreation staff is asking, ‘Why did they do this to us?’” he said. “It’s almost like a personal attack.”
