As California's post production tax credit is celebrated, a federal credit could be a game changer

At Signature Post in Burbank, Mariella Abaunza, the post-production company’s executive vice president for business development, shows off a photo of her talking to Gov. Gavin Newsom at the recent signing of AB 2319 at the Television Academy in North Hollywood.

Marielle Abaunza holds a photo of her and Gov. Gavin Newsom at the signing ceremony for California's new stand-alone post-production tax credit.

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Adolfo Guzman-Lopez

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LAist

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She was there with the coalition that lobbied for the creation of a new stand-alone tax credit for post-production work done in California.

“It definitely restored my faith in government. ... Advocacy works,” she said.

It was a sizable coalition. Abaunza is president of the California Post Alliance, the post-production industry’s trade group. Leaders of the Motion Picture Association and the Editors Guild were there too.

The post-production tax credit is aimed at stopping the flight of TV and film work to other states and countries, attracted by generous tax incentives.

While there are existing tax credits for filming in California, under the new law, productions qualify for a 35% to 50% tax credit if post-production work such as editing, color correction, scoring and sound mixing is done in California, even if the filming was done outside the state.

But industry advocates acknowledge there’s a weakness in the law: Proponents initially asked lawmakers to set aside $100 million for the post-production tax breaks. By the time Newsom signed the bill into law, that amount had been drastically reduced to $10 million.

“That's going to get used up in a couple days. … It's not hard to allocate $10 million in post-production in California,” said Stephen Weizenecker, an entertainment lawyer based in Atlanta who advises TV and film productions on how to take advantage of tax credits in U.S. states and overseas.

But he said that regardless of the much lower cap, the credits will make California more competitive.

Abaunza hopes it will be a boost for Signature Post. The 6-year-old post-production company, which mixed sound for films and shows like  "Everything Everywhere All at Once," "American Fiction," and "Lessons in Chemistry," has been experiencing a slowdown, like many others.

“We're still ahead of the game, and we still have the largest concentration of post-production talent of anywhere in the world,” Abaunza said of Southern California.

But she said that post-production advantage has been eroded by new facilities and worker talent in the U.K. and Canada, among other countries.

Monica Levinson, executive producer of FX’s "Love Story," "Say Nothing," and many other TV and film projects, points out that those countries have another advantage: a lot more government social services.

She compared that to the U.S. “The one thing that this country has are unions, and it has health insurance, and it has pension plans, and the things that need to be put into the budgets of productions,” she said.

Weizenecker also noted that as much as producers might want to keep production in California or the U.S., they may not be the ones making the decisions about where work is done.

“ If Netflix only gives you so much to spend on the production, including post,” he said, “you're gonna go where it's the most cost-effective.”

Federal game changer

While the California tax credit is a step in the direction of keeping productions in the state, a much bigger tax credit is now making its way through the federal legislative process that may be even more transformative.

It’s called the Motion Picture, Television and Entertainment Revitalization Act and was co-authored by U.S. Sens. Adam Schiff, a Democrat from California, and Tim Scott, a Republican from South Carolina. President Donald Trump has also said he supports it.

If the bipartisan birth and early life of the bill isn’t enough to raise eyebrows, what it promises may be: a 20% federal, labor-based tax credit to U.S. TV and film productions where 75% of the days spent on principal photography happen in this country.

The bill would also favor post-production work and extend benefits to productions in some rural areas and places affected by disasters.

Marielle Abaunza is executive vice president of business development for Signature Post in Burbank.

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Adolfo Guzman-Lopez

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LAist

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“These things could be real game changers to bring back the work here,” Levinson said. She’s the co-chair of the legislative committee for Producers United, a 3-year-old group that advocates for established TV and film producers. That position led her to join the coalition of groups working to get the federal bill passed.

TV and film production and post-production used to be dominated by California, and L.A. County in particular. But Hollywood, as it refers to what you see on the big and small screen, is a national business now.

“Everybody in this country is behind this federal incentive. And therefore, that's why it's become such a bipartisan effort because there's production in every state right now,” Levinson said.

Supporters have not said how much less money would go to public coffers if this federal tax credit passes.