California exhausts film tax credit funds for the year

As New York celebrates the long-awaited renewal and expansion of its film tax credit program, California confronts a sobering reality: Its film tax credit money for the current year has run dry.

The California Film Commission has allocated all of the $100 million in tax credits available this year to 30 projects and now has a waiting list of 45 projects. The program, enacted last year to stem the flight of production from California, provides a 20% to 25% tax credit on qualified production expenses that can be applied to offset state income or sales tax liabilities. Although limited in scope compared with what other states offer -- the incentive doesn't cover talent costs and excludes commercials, for example -- it has been popular, especially among independent filmmakers. In the first year of the program, the commission allocated $200 million to 77 projects. That money ran out in January. When the commission began accepting applications for the second year on June 1, it received more than twice the number of applications than it had funding for, Lemisch said. Applicants were selected randomly by lottery and received notices July 1 indicating that they had been approved for the credits, which can be claimed in 2011.