California Governor Gavin Newsom has a big-budget plan to revive what has long been his state’s signature sector—one that has lost its luster as film and television productions chase more lucrative opportunities out of state and overseas.
In a bold move that has sparked debate about the future of the film industry and the Golden State’s role within it, Newsom has proposed a significant expansion of California’s Film and Television Tax Credit Program, which offers incentives to studios that choose to shoot and produce their shows and movies in the state.
Last fall, the governor proposed more than doubling the size of the program to $750 million from $330 million—where it has remained since 2014—and has since been working to fold this into California’s hotly debated budget. Newsom recently credited the program with bringing dozens of projects to the state, expected to employ 6,500 cast and crew and generate “$664 million in economic activity.” However, he has argued that the expansion is necessary to ensure Hollywood does not lose its status as one of the entertainment industry’s epicenters.
“California didn’t earn its role as the heart of the entertainment world by accident — it was built over generations by skilled workers and creative talent pushing boundaries,” Newsom said in a statement. “Today’s awards help ensure this legacy continues, keeping cameras rolling here at home, supporting thousands of crew members behind the scenes and boosting local economies that depend on a strong film and television industry.”
A spokesperson for the governor described the tax credit program as “a proven economic engine” in a statement to Newsweek, adding that, “at a time when other states are aggressively luring productions away from California, the Governor’s budget is prioritizing a smart, strategic investment like this to keep good-paying, union jobs at home and protecting one of our most iconic industries.”
La-La Land’s ‘Dire Straits’
The COVID Pandemic and its protracted effect on movie productions worldwide, the 2023 Hollywood labor disputes, and this year’s wildfires have all spelled difficulty for California and its cinematic economy, and brought into sharper relief the issues Newsom believes could lead to its further decline.
Add to this the already prohibitively high costs associated with shooting in L.A. According to a report published in May, the city’s permit application fee is $3,724, compared to $1,000 in New York, $540 in London and only $400 in Atlanta, Georgia. Fueled by these low costs, as well as a tax incentive program that outdoes California’s, Georgia has already become the nation’s leading location for movie productions.
Photo-illustration by Newsweek/Getty/Canva
Further straining California’s grip on the industry is the wider exodus of productions from American shores since COVID. As entertainment lawyer and industry expert Jonathan Handel puts it: “You have an increased number of locations fighting for slices of a smaller pie.”
Locations including the U.K., Australia, and Eastern Europe, he told Newsweek, have benefited from their own film subsidies and lower labor costs, while developing their own expertise and “crew depth.”
“The industry overall, I wouldn’t say it’s dying, but it is in dire straits,” he said. “It’s in a very difficult place.”
Trump’s Movie Tariffs and Newsom’s Big-Budget Plan
It is these issues Governor Newsom has cited in arguing for increasing the state’s film tax credit. According to the governor’s office in October, around 71 percent of the projects that were rejected by the program subsequently chose to film out of state, costing California an estimated $1.6 billion in production spending between 2020 and 2024.
And it is the wider growth in the desirability of shooting abroad that drew the ire of President Donald Trump, who in early May declared that the American movie industry was dying “a very fast death,” while announcing an imminent, 100-percent tariff “on any and all movies coming into our country that are produced in foreign lands.”
The plan—dubbed “absurd” by Handel—was met with confusion from industry figures, who questioned how customs authorities would be able to apply a tariff on an intellectual property article such as a movie, or portions of one shot abroad then spliced together by a team in the U.S.
“Does that mean you can hold up the movie in customs? I feel it doesn’t ship that way,” was the reaction of director Wes Anderson when asked about the prospect during the Cannes Film Festival. Jon Voight, one of Trump’s unofficial envoys to Hollywood, did not comment on the specific remedy, but told Variety that “something has to be done, and it’s way past time.”
And Trump’s sentiment received similar support from Newsom himself, despite his tenure as California governor being increasingly defined by a series of bitter and public clashes with the president. Newsom proposed a $7.5 billion nationwide tax incentive program – which the U.S. currently lacks – and said he was “eager to partner with the Trump administration to further strengthen domestic production and Make America Film Again.”
Following Trump’s Truth Social policy announcement, the White House swiftly clarified that “no final decisions” had been made on the possibility of tariffing foreign films. And since then, there have been no concrete developments regarding either this plan or Newsom’s proposal.
The governor’s office said it is still eager to work with Trump to this end, and has offered the administration technical expertise and implementational guidance to help “keep American stories made on American soil.”
However, the spokesperson expressed disappointment that this plan was not included as part of the reconciliation bill – the sweeping legislative package currently making its way through Congress and comprising much of Trump’s domestic agenda – adding: “Perhaps the Trump administration isn’t as committed to the success of America’s film industry as they have suggested they are.”
But the governor has been successful in his California-focused efforts, recently reaching an agreement with state lawmakers to include hiking the film tax credit program in the budget, just in time for the July 1 start of the fiscal year.
“The expansion will be successful,” said a spokesperson for SAG-AFTRA, America’s premier labor union for media professionals working in film and television. “With the doubling of the CA production tax incentive program, we believe it will help attract and retain many new productions to the state.”
However, Handel said restoring Hollywood’s former glory is “not going to be easy,” and added that the tax credits alone are “not going to be a miracle cure.” He noted that key elements of a production, such as actors’ salaries, will remain ineligible for rebates under the $750 million program.
Ben Samek, whose company Banijay has produced shows such as MasterChef and Below Deck, criticized Newsom’s plan for failing to include unscripted TV productions within its purview. In an article for the Hollywood Reporter, Samek wrote: “The Governor’s current plan falls short of the bold vision needed to restore California’s position as a global entertainment hub – especially when it comes to unscripted television, which is not only an area where I am especially well-versed but also a genre where the speed and long-term repeatability and expansion of franchises can pay immense dividends to local economies.”
But Newsom’s proposal appears to be the most significant legislative effort to stave off the growing threats to Hollywood, and is expected to add nearly $5 billion to the California economy annually. If La-La Land is to avoid becoming a museum to its own golden age, the plan marks a meaningful first step toward reversing its long-term decline.