Gov. Newsom Struggles to Restore California's Film Industry

California's film industry is flatlining and Gov. Gavin Newsom is struggling with how to save it.

Newsom is trying to double the state's film tax credit in the upcoming budget to bring entertainment back to California. Movie and TV productions have fled California, shooting in cheaper locales that offer generous tax credits and cheaper labor, even filming in Europe to save money.

Since 2020, Hollywood has faced the pandemic, the writers and actors strikes, and the California wildfires at the same time the streaming bubble burst, leading to a decrease in scripted productions. Some wonder if Hollywood can ever be restored to its former glory, even with an increased tax credit.

"The time for this discussion was 10, 15, 20 years ago," said Richard Rushfield, editorial director and columnist with The Ankler, an industry newsletter, to Politico.

Newsom frequently texts with Netflix CEO Ted Sarandos and met Thursday with Jon Voight, President Donald Trump's "special ambassador" to Hollywood, Politico said. Newsom has developed a closer relationship with Hollywood than his predecessor, Gov. Jerry Brown, sources told Politico.

According to FilmLA, 2024 was the second least-productive year of movie and TV production in Los Angeles over the last 30 years, only trailing 2020, at the height of the COVID pandemic.

"The levels of unemployment in this industry in Los Angeles are at Depression-era levels," said Assemblymember Rick Chavez Zbur, to Politico. "In some of the unions, they have had unemployment levels of 40 and 50%."

The California Film Commission said projects approved for tax credits in California from 2020 to mid-2023 generated $7.3 billion in state activity. There is frustration that state leaders don't do more to help Hollywood, Politico reported.

"We, for so many years, have sat on our laurels, assumed dominance in this area because of the history of Hollywood and expected that we didn't need to do very much to retain this iconic industry," said state Sen. Ben Allen, a Los Angeles Democrat pushing to expand the tax credit. "Unfortunately, dollars speak louder than tradition."

Newsom has worked to make doubling the tax credit to $750 million a priority, even though California faces a budget crisis. Union entertainment workers rather than glitzy celebrities have become the face of the program, as they work to sell it as something that will help middle class jobs.

"This was the story of hundreds of union workers who have had to mortgage homes and foreclose on their homes and move to different states because of just how slow the business is," Hollywood producer Scott Budnick told Politico.

Hollywood executives have said capping the tax credit at $750 million will still make it difficult to compete with Georgia, which offers uncapped film tax credits and has become home to numerous film TV shoots, Politico reported.