California is preparing to add a diversification requirement to its $330 million tax incentives for film and television production, as lawmakers seek to use their influence to get the industry to better reflect the state’s demographics.
Gov. Gavin Newsom is expected to sign bill SB 485, which would extend the tax break through 2030. On Wednesday night, the bill was amended to require products that receive the credit to set employment goals that “widely reflect Californians, from where race, ethnicity, and gender.”
Diversity in Hollywood has been a topic of debate for years, but until recently there was little incentive to promote it. In 2020, the Academy of Motion Picture Arts and Sciences adopted inclusion criteria to be eligible for Best Picture. Few other countries – including Illinois And the New Jersey They added diversity criteria to their film credit programs.
“There comes a point where you can’t talk about it anymore — you have to show work,” said Society member Wendy Carrillo, D-Los Angeles, who is one of the main advocates for adding the diversity requirement to California’s film incentive.
California is 40% Latino, 35% White, 16% Asian American, and 6.5% Black, according to the latest census estimates. In 2020, the California Film Commission reported that the state’s film and television workforce – for those whose race or ethnicity can be identifiable – was 70% White, 17% Latino, 7% Black and 4% Asian American. This data came from projects that received tax exemption from 2015 to 2020.
The report also showed a significant gender disparity, with men occupying 75% of film and television jobs, and 25% held by women.
Under the law, which will become effective on July 1, 2023, movie tax credit recipients from the state will have to file a Diversified Business Plan. The law would not specify the goals of the plan, other than to say that employment should be “widely reflective” of the state’s population.
Products must also provide a final diversity report, showing whether they are meeting their employment goals. Products that are able to demonstrate that they achieved their goals or made a “good faith effort” will be eligible for an additional 4% tax credit, in addition to the 20% or 25% credit allowed under current law.
The same provision—diverse business plan requirements and a 4% bonus—was included in a separate $150 million stimulus in California to build new audio production stations, which was approved last year.
When drafting diversity requirements, lawmakers should navigate Proposition 209, the 1996 initiative that amended the state constitution to criminalize affirmative action in state employment, school admissions, and government contracting.
The regulations for sound system credit, which were published earlier this year, say there is no intention “to require or encourage a Diversity Action Plan to include quotas or other digital goals.” By putting the burden on production to create their own diversity plans — without making clear what the plans should include — lawmakers hope to avoid raising constitutional concerns.
Last year, Newsom signed a two-year temporary increase in credit, bringing the annual total to $420 million for the fiscal years ending 2022 and 2023. The program is set to return to $330 million next year unless lawmakers decide to approve further expansion.
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