Steve Hilton, the front-runner for California governor, is preparing to announce an ambitious plan to save Hollywood productions and their jobs. Hollywood Reporter I’ve learned.
The Republican candidate will support the film tax exemption plan, which can reach 60 percent for some productions and will never be less than 40 percent. Currently, the cap in California is typically 45 percent, with many productions getting 35 percent. The move would significantly increase what is already, by many measures, the most generous tax relief program in the country.
Like some of his opponents, Hilton also doesn’t want to cap the total credit (it currently can’t exceed $750 million annually). Under the nominee’s plan, incentive funds can also be used to cover post-production and ancillary costs, which is not currently permitted.
Hilton is expected to officially unveil his Hollywood stand on Thursday, shortly after meeting with the Motion Picture Association earlier in the day.
Other candidates offered parts of his plan. For example, Democrats Matt Mahan and Tom Steyer both support raising the cap, while Mahan also favors including above-the-line expenses, a controversial idea for unions, which want to see the money allocated to more middle-class workers. The Democratic-sponsored bill making its way through the Assembly would also allow credits for subsequent work on projects not filmed in the state, something that is not currently allowed.
Some gubernatorial candidates, like Katie Porter, have been more cautious when it comes to cap credits, wary of giving too much stimulus to the entertainment industry as the state budget threatens to collapse under other pressures.
The issue is existential for Hollywood. California filming operations have seen a decline of more than 50,000 jobs in recent years as studios downsize or move elsewhere, though some rays of light have been seen this year, especially in Los Angeles.
In hopes of making California more attractive to producers, Hilton also aims to propose an “expediting governor” role for entertainment photography, revamp the California Film Commission, and require credit applications to be adjudicated, in many cases, within 30 days, all of which he believes will help the cause.
But it’s the potential 60 percent credit that will really catch the eye, making production exceptionally inexpensive and counteracting the effects of falling prices in other states. For example, the cost of living in Georgia, a production hub, is 39 percent lower than in the Golden State, which means housing and feeding a film crew there is much less expensive. But a tax break twice the size in California (Georgia’s usually caps at 30 percent) would make up for that.
In a phone interview about the plan, Hilton said: “I don’t want to be reckless with resources, but if we really want to change behavior, we may have to do something very expensive.” Hilton said he was influenced by the “nudge” theory developed by Cass Sunstein and Richard Thaler, which basically says that incentives change behavior more than constraints.
He cautions that the 60 percent credit is a “float” and that the final number could depend on a lot of factors, including the federal tax credit, if it occurs. (The higher federal credit would allow for a smaller increase in California.) The 60 percent can also be intended as a “starter” plan that will only last for a specific period, such as five years.
Hilton has been operating on a traditional small government platform of lower taxes and fewer regulations. He believes such a plan could help bring back some of the produce that has left California. A recent regulatory incident involving A Baywatch Filming on Venice Beach will likely back up his claims, though the issue was resolved without much fanfare.
“I’ve been hearing for months about how difficult it is to film in Los Angeles,” Hilton said in the phone call. “We will have an office run by someone who is a bulldozer when it comes to bureaucracy and can just pick up the phone to get things moving.”
Although attractive to studios, post-production initiatives and additional credits will be expensive, potentially running into the billions. Hilton has more room to maneuver on tax incentives than his Democratic opponents because he aims to cut spending elsewhere, allowing tax revenues to decline even in an austerity environment.
Nor did Hilton — or any other candidate’s public proposals — address how to account for the rise of AI-generated video, which appears poised to dramatically reduce actual filming overall, making the real enemy of California not New York or Georgia but Silicon Valley.
The production issue is at the heart of the race for the state’s highest office. And with the gubernatorial campaign still an unresolved free-for-all, the question of how to save Hollywood, an essential industry (and an attractive fundraising opportunity) remains at the forefront of many candidates’ minds moving forward on education, housing and the rest of the electoral bucket.
Hilton has the endorsement of Donald Trump, who will argue it will help him win approval for a federal film tax credit to keep production in the US, even if the issue is mostly stalled in Washington. Hilton has met with John Voigt, who has been promoting credit in D.C., on multiple occasions, including last week.
Hilton, a former Fox News host, Silicon Valley entrepreneur and British political consultant, believes he has a certain outsider appeal that other candidates lack; Unlike many of his opponents, he has never run for public office.
In the primary, and if he gets there, in the general election, Hilton believes he can win over enough moderates and Democrats disillusioned with the state’s education and finances to carry him to Sacramento. But California has become increasingly blue since Arnold Schwarzenegger left the governor’s office in 2011, and whether a Trump-endorsed Republican can turn that tide on Election Day is already expected to amount to a national repudiation for the president.
The primary election takes place on June 2, with the top two vote-getters advancing regardless of party. Hilton maintains a narrow lead in the latest polls over all the primary candidates, although many more voters say they are undecided.
