California Film Tax Credit Hits Snag Over Industry Diversity

Gov. Gavin Newsoms push to extend the California film and TV tax credit has hit a snag over the issue of industry diversity.

Newsoms budget proposal includes extending the $330 million filming incentive, which is currently set to expire in 2025, for an additional five years.

But at a hearing last month, Assemblyman Phil Ting, who chairs the Budget Committee, faulted the California Film Commission for failing to produce diversity data for productions that have already received tax benefits. He also questioned the need to rush the extension without first seeing the data.

State law requires the commission to produce annual reports starting in January 2022 on the diversity of projects. After the hearing, the commission belatedly posted the first annual report on its website.

After reviewing it, Ting said the numbers show that the studios have much more work to do.

The studios need to really demonstrate a lot more results before we can move forward with any further tax credit, Ting told Variety in an interview on Wednesday. We may need to wait a year California provided the money, but they didnt provide the jobs to a diverse group of Californians.

Over the last two years, legislators have made diversity a central focus as they consider the tax credit program.

In 2021, the Legislature approved a new $150 million incentive for the construction of soundstages, which included a bonus for productions that meet diversity hiring goals.

Newsoms proposal to extend the $330 million program would also include a diversity incentive. Under the current draft, productions that fail to make a good faith effort to hire a diverse workforce would lose up to 4% of their credit allocation.

In both instances, the goal is to make productions broadly reflective of the states demographics.

The data released by the commission shows that white people are overrepresented in the industry workforce, compared to the states population, while Latinos and Asian Americans are underrepresented.

For the first time, the film commission also released diversity data on a project-by-project basis for 16 productions that have received state tax credits.

Some projects, like the Latino-themed TV series Mayans M.C. on FX and the Netflix film Me Time, did hire a diverse workforce.

In the interview, Ting argued that shows that diversity is achievable.

The productions that cared about diversity did really well across the board. You could see it, he said. For the projects that didnt care, they did poorly.

He also noted that the Laborers union is heavily Latino, which helps boost Latino representation across the board. But on the whole, he said the industrys track record is poor.

California did its part and got them the resources to stay in California, he said. They didnt really do their part and employ a representative cross section of the people living in California.

Assemblywoman Wendy Carrillo, who has led efforts on diversity in Hollywood, said she found the data shocking, and noted that the commission only posted it after lawmakers demanded it.

Im glad the numbers have been released, she said. Its unfortunate the numbers reflect what we already felt.

The California Film Commission has touted its efforts to encourage diversity through the Career Readiness Program and the Career Pathways Program, both of which serve a clientele that largely comes from underrepresented groups.

Carrillo suggested that the state could learn from training programs in other states about how to ensure that graduates are set up for a career, rather than just placed in a job.

The governors proposal would require productions to submit a diversity workplan, which would set hiring goals on race, ethnicity, gender and disability status. The productions would later have to show that they either hit their goals or made a good faith effort to do so to receive their full credit allocation.

By putting the onus on the productions to set the goals, the state is seeking to work around the restrictions of Proposition 209, the ballot measure that outlawed affirmative action in state hiring and contracting.