California's film and television industry, long centered in Los Angeles, is fighting to keep productions from relocating to competing states offering larger tax incentives.Photo: jondoeforty1 / BY-SA 2.0

LOS ANGELES — For the better part of two decades, California has watched a steady stream of film and television production cross state lines and national borders, chasing tax incentives that Sacramento once treated as an afterthought. The result was a slow bleed familiar to anyone who has worked below the line in the entertainment industry: soundstages sitting dark, grip trucks parked, crew members driving to Georgia, New Mexico, the United Kingdom or Canada for the same jobs they used to walk to in Burbank.

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The state's answer, refined over the past several years and significantly expanded most recently, is a film and television tax credit program that now ranks among the largest in the country. California lawmakers and Gov. Gavin Newsom moved to roughly double the annual cap on the incentive, pushing it well beyond the $330 million ceiling that had governed the program for years. The expansion reflects a recognition inside the Capitol that the entertainment industry, long treated as a permanent fixture of the California economy, is not immune to competition from other states willing to write bigger checks.

The stakes go beyond nostalgia for the studio system. Production work supports a wide network of jobs that rarely make it into awards-show montages: set builders, costumers, camera operators, caterers, drivers and the small businesses that rent equipment or lease stage space. When a production chooses Atlanta over Los Angeles, that ripple effect lands on payrolls across Southern California, not just on a studio's bottom line.

Georgia's aggressive incentive program, which offers a transferable tax credit with no hard annual cap, has been a particular thorn for California officials. So has the rise of production hubs in New Mexico, Louisiana and abroad, where the U.K. and Canada have built out sophisticated infrastructure and crew bases specifically to court American studios. Streaming platforms, which now account for a large share of scripted production, have shown little sentimental attachment to any single location, following the incentive money as readily as traditional studios do.

California's expanded credit is designed to make the state more competitive on that math, offering a higher percentage rebate and, for the first time, extending eligibility to a broader range of projects, including some animated productions and shows that had previously fallen outside the program's reach. Industry groups and labor unions representing below-the-line workers pushed hard for the changes, arguing that California could not simply rely on its legacy infrastructure and cultural cachet to keep production at home.

Supporters of the expanded incentive frame it as a defensive necessity rather than a giveaway. They point to vacancy rates at major studio lots and independently owned soundstages across the Los Angeles basin as evidence that the state had already ceded ground it can ill afford to lose permanently. Once a production ecosystem relocates, the argument goes, the crews, vendors and specialized labor that make a place attractive to filmmakers relocate with it, making it harder to win the work back even if the incentive gap eventually narrows.

Critics of expanding the credit, including some fiscal watchdogs and lawmakers skeptical of targeted tax breaks, have questioned whether the state is effectively competing in a race to the bottom with other jurisdictions, committing hundreds of millions of dollars annually to an industry that, unlike manufacturing or agriculture, can relocate with relative ease regardless of how generous California's terms become. They argue the money might do more for the broader economy if directed elsewhere, and note that success is difficult to measure precisely given how many variables affect a studio's location decisions beyond tax policy alone.

The debate is playing out against a broader contraction in scripted television and film production nationally, driven by streaming services pulling back on content spending after years of aggressive expansion, along with lingering effects from the 2023 labor strikes that shut down much of the industry for months. Fewer total productions means the competition among states for the ones that remain has only intensified, raising the pressure on California to demonstrate that its incentive dollars are translating into actual jobs rather than simply matching what other states already offer.

For crew members and small vendors who depend on a steady production calendar, the policy fight in Sacramento is not abstract. Union halls representing camera operators, costumers and grips have tracked member employment levels for years as a rough barometer of the industry's health in the state, and many describe a workforce that has grown accustomed to gaps between jobs that did not exist a decade ago. Whether the expanded tax credit meaningfully closes that gap will likely take several production cycles to assess.

What is clear is that California is no longer treating its entertainment industry as an untouchable institution immune to competitive pressure. The expanded incentive program represents a bet that the state's remaining advantages, deep crew experience, existing infrastructure and proximity to studio decision-makers, combined with a more competitive financial offer, can be enough to reverse a trend that has quietly reshaped where American film and television actually gets made. The industry that built modern Los Angeles is fighting to prove it still belongs there.

Georgia's aggressive tax credit program, which offers a transferable credit with no annual cap, has drawn productions away from California.Photo: jericl cat / PDM 1.0

California lawmakers and Gov. Gavin Newsom approved a significant expansion of the state's film tax credit program to make the state more competitive.Photo: Michael Dunn~! / BY 2.