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Gavin Newsom’s Hollywood Bailout

Gov. Gavin Newsom spent the past year celebrating a massive expansion of California’s Hollywood tax credit program, boosting it to a record $750 million a year. Then his own budget managed to kneecap it. 

Now Sacramento is scrambling to fix one of the governor’s biggest political headaches. 

More than three dozen California lawmakers—including senior Democrat legislators—are urging Newsom to reverse a budget provision they say will cripple Hollywood’s newly expanded tax credits. 

Sacramento expanded Hollywood’s subsidy with one hand while quietly weakening it with the other. 

Lawmakers now say a broader corporate tax credit limitation buried in the state budget inadvertently swept up the very film tax credits they had spent months promoting. Assembly Democrat Caucus Chair Rick Chavez Zbur, who helped write the original expansion, said members believed a carve-out for film credits had already been secured before the budget vote. 

Just months after celebrating the historic expansion, Newsom signed a budget extending broader limits on the use of corporate tax credits. Through 2029, companies generally remain limited to claiming $5 million in credits annually. Beginning in 2030, they generally will be limited to claiming either $5 million or 70% of their California tax liability in a given year, whichever is greater. Hollywood says this change significantly diminishes the value of the newly expanded incentive. 

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