Gavin Newsom's Gamble: $750M for Film Industry!

Gavin Newsom in April 2024. Photo courtesy of Bureau of Reclamation. Public domain.

California is about to make a bold $750 million bet on Hollywood's survival. Last year, Governor Gavin Newsom unveiled a plan to more than double the state's Film and TV Tax Credit Program, aiming to keep the entertainment industry from fleeing to cheaper pastures. This expansion, approved by lawmakers on June 27, 2025, nearly doubles the current $330 million cap. But with the state grappling with an alleged $12 billion budget shortfall and looming cuts to healthcare and education, this cinematic gamble has sparked a fierce debate: Is this a lifeline for middle-class jobs or a luxury California can no longer afford?

The stakes couldn't be higher. Hollywood is not just glitz and glamour, it's a vital economic engine supporting thousands of middle-class workers. Yet, productions are vanishing, lured away by friendlier tax incentives in other states and countries. Newsom's proposal, backed by Los Angeles Mayor Karen Bass and other key legislators, is a high-wire act to keep California's entertainment crown from slipping away.

Too Little, Too Late?

The current tax credit program, capped at $330 million annually, has struggled to compete with states like New York and Georgia, which offer more generous incentives. Newsom's plan will boost the credit to $750 million starting as early as July, nearly doubling the available funds and expanding eligibility to include refundable credits. This means productions could receive cash back even if they don't owe state taxes, a game-changer for many projects. The urgency is clear. Industry insiders warn that without immediate action, California risks becoming the next Detroit, a cautionary tale of economic decline after losing its industrial base. Producer Noelle Stehman, part of the "Stay in LA" campaign, recently sounded the alarm at a town hall, emphasizing that, "This is not hyperbole to say that if we don't act, the California film and TV industry will become the next Detroit auto," as reported by the New York Post.

The exodus is real. Major productions like Lucasfilm's "Ahsoka" have relocated overseas, with the number of on-location shoots in Los Angeles dropping by 22.4% in the first quarter of 2025 compared to the same period in 2024, according to a report by nonprofit organization FilmLA, as reported by the New York Post.

The competition is fierce, with other states offering generous incentives and allowing "above-the-line" costs—such as salaries for key talent—to qualify for credits, as reported by the New York Post — a benefit California has historically excluded. Under the new plan, California will offer refundable credits and increase its incentives up to 35% for qualified productions, aiming to match or surpass its rivals.

The One Thing They Didn't See Coming

Newsom's proposal isn't just about dollars; it's a strategic move to protect the middle class behind the scenes. The film and TV industry employs thousands of unionized workers like grips, editors, and set painters, whose livelihoods depend on steady production. Scott Budnick, a producer and activist, has been rallying support for the expansion, emphasizing that this isn't a fat cat handout but a lifeline for working families. Budnick told the Hollywood Reporter that "These young people that I care about, that I fight for, this is their livelihood, this is their dream." He continued, "And if I've pushed them into a business where their dreams can't come true, that's heartbreaking for me."

The timing couldn't be more contentious. California faces tough choices as it wrestles with a reported $12 billion budget shortfall that sources say threatens cuts to healthcare and public services. Lawmakers are caught between the immediate needs of residents and the long-term economic benefits of a thriving entertainment sector.

Assemblymember Rick Chavez Zbur, who has championed the bill, argues that the tax credits are a job program that keeps people employed and off unemployment rolls, a cost-saving measure in disguise.

In a release from the California State Assembly Democratic Caucus, Zbur said "Modernizing the California Film & TV Tax Credit is essential to protecting film and television jobs. California's iconic entertainment industry has created hundreds of thousands of good, high-paying jobs, but other states and countries are aggressively luring productions away with stronger incentives — threatening to dismantle the industry we built."

Why This Could Blow Up Fast

The proposal now awaits Governor Newsom's signature after clearing the California Legislature. Critics question whether pouring hundreds of millions into Hollywood is prudent when public services are strapped for cash. Supporters counter that without these incentives, the state risks losing its entertainment industry entirely, along with the tax revenue and jobs it generates.

Mayor Karen Bass has thrown her weight behind the plan, highlighting the importance of preserving Los Angeles as a global production hub and saying, "Hollywood is the cornerstone of this city and our economy and our message to the industry today is clear – we have your back," as reported by the Los Angeles Issue. Her support reflects a shared concern among city leaders about the economic impact of losing film and TV projects.

Meanwhile, Newsom is positioning himself as a defender of California's iconic industry, even as he faces criticism from political opponents and budget hawks. His administration is also reportedly pushing for a $7.5 billion federal tax incentive to complement state efforts, signaling a full-court press.

The tension is palpable. On one side, there's the fear of a hollowed-out Hollywood, with studios and productions fleeing to greener pastures. On the other, there's the reality of a state budget stretched thin, with difficult decisions looming over essential services. The question remains: Can California afford to keep its entertainment industry afloat without sacrificing the wellbeing of its residents?

The High-Wire Act

California's film and TV tax credit expansion is a bold gamble on the future. It aims to halt the runaway productions that have chipped away at Hollywood's dominance and shield thousands of middle-class jobs that form the backbone of the industry. But it also risks igniting fierce debate over fiscal priorities in a state facing serious economic challenges. For you, the viewer or industry worker, this means the next few months could determine whether California remains the heart of American entertainment or watches its crown slip quietly to competitors. The stakes are high, the drama real, and the outcome uncertain.

References: California's Hollywood Tax Incentive: How Industry Is Lobbying Newsom | Los Angeles in danger of becoming 'the next Detroit' as film and TV productions move out | Governor Gavin Newsom has is own plan to fix Hollywood - AV Club | Hollywood set for a boost as Governor Newsom proposes $750 million film tax credit expansion | Key Elements of Bills to Modernize California Film & TV Tax Credit Unveiled | California lawmakers approve film and TV tax credit expansion to $750 million