(The Center Square) – California Gov. Gavin Newsom has announced that the first year of the state’s expanded Film and Television Tax Credit program is on pace to deliver a record $6.6 billion in economic impact.
But not everyone shares the Democratic governor's enthusiasm, including an economist who sees the tax credits as a "bribe" to make up for California's high taxes. More about that will be discussed later in this story.
In the last fiscal year (July 1, 2025 to June 30, 2026), Program 4.0, as it is known, has awarded 170 total projects that represent 34,921 cast and crew jobs as well as 212,065 background performers or "extras" in days worked.
The California Film Commission administers Program 4.0. As explained on its website, the $3.75 billion program was given a five-year run with a scheduled end date of June 30, 2030.
"California has long set the standard for entertainment production, creating good-paying jobs and showcasing the creativity and innovation that define the Golden State,” said Newsom in a press release. “The first year of the expanded tax credit program is already delivering results — generating billions in economic activity, creating opportunities for businesses and the workforce, and bringing more productions home to California."
In the television category, 20 new series and six pilots received tax credits in the last year. The list includes "Fallout," "NCIS: Origins," "The Pitt" and "The Studio."
Recent movies getting credits include Disney’s “Hexed,” Artists Equity’s “Gingerbread Men,” and DreamWorks' “Donkey,” a prequel about a character in the "Shrek" films. Artists Equity is a production company founded by actors-producers Ben Affleck and Matt Damon.
Los Angeles Mayor Karen Bass said the tax credit is proof that when office holders advocate for the entertainment industry, they create real economic opportunities.
“The success of the tax credit is why I’ve called for a no-cap State tax credit and a federal film incentive,” said Bass in her own press release. “Our entertainment industry is a vital part of our local economy that thousands of hardworking Angelenos rely on, and it will remain a priority for my administration.”
Projects are not selected on a first-come, first-served basis. They are evaluated using a "Jobs Ratio Ranking," which awards credits to productions that generate the most local employment and economic activity.
All eligible projects must have a minimum budget of $1 million for movies or $1 million per episode for television. Independent films and producers are eligible to apply.
Colleen Bell, director of the California Film Commission, said the industry is seeing the program work as intended by bringing production, jobs, and economic opportunity throughout the state.
“From major studio features and independent films to animated projects, the diversity of productions choosing California speaks to the strength of our industry and the unmatched talent, infrastructure, and creative ecosystem that exist here,” said Bell in Newsom’s press release. “We look forward to building on this momentum in year two.”
Wayne Winegarden, a senior fellow in business and economics at Pasadena-based Pacific Research Institute, has a different take on California’s use of state tax credits aimed at getting and keeping TV and film productions.
Winegarden said tax credits are merely a "bribe" or temporary bandage used by California to compensate for its high taxes, heavy regulations and costly business climate.
"Tax credits are just a means for the state to buy down its bad environment,” Winegarden told The Center Square in a phone interview. “We overtax, we over-regulate, which imposes costs, so to make the state competitive, we have to kind of give back some of that money."
States such as Georgia have been luring productions away for years, due in part to greater tax incentives and a lower cost of doing business. Like California, Georgia also offers a versatile geography and climate.
The exodus has been so great that people and news outlets have referred to this as the "Y’allywood Phenomenon," which is a play on the name Hollywood and the widely used southern phrase "y’all."
When asked what California should do about this, Winegarden recommended that politicians and bureaucrats reduce the costs that are “driving these kinds of film companies away."
In 2025, the nonpartisan Legislative Analyst's Office called Newsom's expansion of the tax credit a valid approach to increasing the number of productions that choose to film in California, but added, "Although the film tax credit likely increases the size of California’s film industry, there is weak evidence that expanding the tax credit would benefit California’s economy as a whole."
