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Is California's film and TV tax credit in danger? Unions say so

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Is California's film and TV tax credit in danger? Unions say so

Eager to negotiate a measure off the 2024 ballot that would make it harder to raise taxes, unions are alleging the initiative would end a California program that awards hundreds of millions of dollars annually in tax credits to television and film studios.

The claims are part of an effort by unions to increase pressure on business interests backing the measure to strike a deal to remove the proposal from the November ballot, which remains possible amid an intense negotiation period at the California state Capitol. If the concerns about the tax credits catch on, movie studio executives could be a powerful addition to the opposition campaign.

Losing film and television tax credits would be particularly damaging as the motion picture industry struggles to recover from the COVID-19 pandemic, two major strikes and an ongoing industry contraction.

“This thing has the potential to devastate our industry and the jobs that support it, as well as those that are touched by this industry,” said Thom Davis, president of the California council for Hollywood crew members union IATSE.

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So far, no movie studios have joined the opposition campaign led by the Service Employees International Union California, California Teachers Assn, Northern California Regional Council of Carpenters and the State Building & Construction Trades Council of California.

Warner Bros. Discovery and a lobbyist for the Motion Picture Assn. declined to comment. The Times reached out Tuesday to several other major studios, including Disney, NBCUniversal, Sony, Paramount and Netflix, for comment.

The California Business Roundtable, a proponent of the measure, pushed back on the union claims. The film credits are a tax deduction, not an increase, and would not be affected by the ballot initiative, the business organization said.

“We’ve been waiting for these kinds of scare and intimidation tactics for weeks,” said Rob Lapsley, president of the roundtable.

Removing the Taxpayer Protection and Government Accountability Act from the November ballot is a top political priority of labor unions and Democrats, who are afraid voters will support the proposal and tip the balance of power in Sacramento.

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The proposal, pushed by Lapsley’s group and the Howard Jarvis Taxpayers Assn., strips the state Legislature and the governor of the ability to increase taxes without statewide voter approval. The measure could limit state and local funding and make it more challenging for the governor and Legislature to generate funding for new programs, or respond to an economic crisis without sacrificing their own policy agenda.

The measure would have a “chilling effect on government’s ability to invest in services and infrastructure that the state of California and Californians need in order to grapple with all of the challenges ahead,” such as climate change, an aging population and the rise of artificial intelligence, said Keely Bosler, former director of the California Department of Finance who is working with the opposition campaign.

Gov. Gavin Newsom and Democratic state lawmakers petitioned the California Supreme Court last September to intervene, arguing that the change revises the California Constitution and should require a two-thirds vote in the Legislature to appear on the ballot. The high court heard oral arguments on the case in May and could offer a ruling to strike the measure from the November ballot.

Lawyers for the proponents and the opposition campaign disagree over whether the measure will impact film and TV tax credits.

The measure asks voters to require local governments to vote on all fee increases, which can now be approved administratively. The threshold to increase local special taxes would increase from a majority to a two-thirds vote of the people.

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Fee increases at the state level, which are often approved by state agencies and boards, would need support from a majority of the state Legislature. The ballot measure also would expand the requirements necessary for a statewide tax increase, which currently can be done with a two-thirds vote of the Legislature. Under the measure, support from a majority of California voters also would be required.

The measure expands the definition of taxes and restricts the potential use of fees to only cover the cost of the service, potentially prohibiting government from redirecting revenue to other purposes.

Opponents say California’s film and TV tax credit program — which underwent a significant makeover in 2023 — could be in jeopardy due to a provision in the proposed ballot measure declaring that “any change in state law which results in a taxpayer paying a new or higher tax” must be passed by at least two thirds of the legislature and approved by a majority vote of the people.

A retroactive clause states that “any tax or exempt charge adopted after January 1, 2022, but prior to the effective date of this act” that was not implemented according to the above rules will be void one year after the measure is passed “unless the tax or exempt charge is reenacted in compliance with the requirements.”

Detractors have interpreted those excerpts to mean that Senate Bill 132 — a 2023 law extending California’s film and TV tax credit by five years and incorporating a new “refundable” feature permitting certain studios to qualify for direct payments from the state — would be overturned if the ballot measure passes in November. SB 132 isn’t scheduled to go into effect until 2025, so the opposition campaign is sounding the alarm about future funding to the tax credit program.

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Unions began delivering the warnings in the final stretch of budget negotiations at the state Capitol. Newsom and Democrats are negotiating among themselves, unions and other interest groups about delaying an increase to the minimum wage for healthcare workers to $25 per hour and a pause on tax credits for businesses to close California’s $45-billion budget deficit.

Those talks are intertwined in conversations about the 2024 ballot measures. Under state law, proponents have the ability to withdraw their measures from the ballot before the June 27 qualifying deadline. Lapsley said he has been open to having talks about the provisions of his measure with opponents, but that hasn’t happened.

“We’ve been crystal clear that we would respect anyone who wants to sit down and have a discussion,” Lapsley said.

But Lapsley has also been adamant about the need for his proposal.

“The importance of [Taxpayer Protection and Government Accountability Act] for the statewide business community as a long term check and balance against a permanent two-thirds super majority progressive Legislature far outweighs any individual elements that they may be talking about at this point,” Lapsley said. “So that is our perspective on this, and that is why we continue to just move forward.”

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The potential effects of the measure on the film tax credit could be a compelling argument for unions.

California currently awards about $330 million annually to dozens of entertainment companies that film in state — a relatively low number compared to more attractive tax programs offered by production hubs in other states and countries that compete with Hollywood for business.

Industry insiders and experts have cited the weakness of California’s tax credit program as one of several reasons why film and TV production has been declining in the state. A recent report by the Otis College of Art and Design found that Los Angeles’ share of domestic film and TV employment dropped 8% last year, losing ground to rivals such as Atlanta and New York.

A complete reversal of SB 132 would spell “absolute devastation” for the local entertainment community, Davis said. The Hollywood crew members he represents are already hurting badly from last year’s work stoppages and the sluggish return to production.

“California would just not be able to compete anymore,” Davis said.

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“The questions [entertainment workers] are asking is, ‘Why would they do this to us?’” he added. “It’s almost like a personal attack.”

Movie Reviews

Movie Review: “Casablanca” – A Timeless Masterpiece –

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Movie Review: “Casablanca” – A Timeless Masterpiece –

A staff report

“Casablanca,” directed by Michael Curtiz and released in 1942, remains a cinematic gem cherished by audiences and critics alike. Set against the backdrop of World War II, this classic romance-drama unfolds in the exotic Moroccan city of Casablanca, a haven for refugees fleeing Nazi-occupied Europe.

The film stars Humphrey Bogart as Rick Blaine, a cynical American expatriate and nightclub owner, whose world-weary demeanor conceals a deep sense of morality. His life takes a dramatic turn when his former lover, Ilsa Lund (played by Ingrid Bergman), re-enters his life with her husband, resistance leader Victor Laszlo (Paul Henreid). As political tensions rise and personal dilemmas intensify, Rick is faced with difficult choices that test his principles and define his destiny.

“Casablanca” is celebrated for its impeccable storytelling, memorable dialogue, and stellar performances. Bogart’s portrayal of Rick Blaine is iconic, capturing both the character’s toughness and vulnerability. Ingrid Bergman shines as the enigmatic Ilsa, torn between love and duty. The film’s supporting cast, including Claude Rains as the charmingly corrupt Captain Renault and Dooley Wilson as the soulful pianist Sam, adds depth and richness to the narrative.

The film’s cinematography, evocative of film noir with its shadowy interiors and smoky atmosphere, enhances the mood of intrigue and romance. Max Steiner’s haunting musical score, highlighted by the timeless melody of “As Time Goes By,” underscores the emotional depth of the story.

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Beyond its cinematic achievements, “Casablanca” resonates as a poignant exploration of love, sacrifice, and redemption amidst the turmoil of war. Its themes of honor, patriotism, and the power of personal integrity remain relevant and compelling to this day.

As a classic of American cinema, “Casablanca” continues to captivate audiences with its timeless charm and universal appeal. Whether revisiting it or experiencing it for the first time, this film promises an unforgettable journey into the heart of one of cinema’s greatest love stories and moral dilemmas.

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Sika Dwimfo, the 'Godfather of Leimert Park,' dies at 83

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Sika Dwimfo, the 'Godfather of Leimert Park,' dies at 83

Artist, master jeweler, community activist and business owner Sika Dwimfo, referred to as the “Godfather of Leimert Park,” died Saturday. He was 83.

His daughter, Milan Dwimfo, posted Sunday on Instagram, “My heart is broken to share that SIKA DWIMFO is our newest ancestor. Thank you everyone for Wednesday. That was the most beautiful sendoff imaginable. He received his flowers while he was here and we should be proud as a community. He loved you Leimert.” No cause of death was given.

Known widely by his mononym, Sika was born Dec. 26, 1940, in New Orleans and grew up in Chicago. He developed a flair for fashion and style from his mother, a tailor who made her son custom suits. As a young man, he owned an art gallery and was befriended by locals including authors Haki R. Madhubuti and Gwendolyn Brooks in an environment rich in jazz, art and poetry.

Eventually, the harsh Midwestern winters wore on the free-spirited Sika and he moved to Los Angeles when he was 31 years old. He became a cornerstone of the Leimert Park community and, since 1992, owned and operated Sika Gallery on Degnan Boulevard. The shop, stocked with jewelry made by Sika, racks of dashikis, beaded necklaces, Ghanaian baskets and Mali mudcloth, weathered the 1992 riots, economic downturns, changing demographics and, more recently, rapid gentrification and the COVID-19 shutdown.

To the end, Sika maintained his sense of personal style. “I like to dress, I like to look nice,” Sika told The Times in 2022. “Now that I’m older, I figure it enhances me. I have to put on something that makes me energetic.”

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Staff writers Julissa James and Kailyn Brown contributed to this report.

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Movie Reviews

Short Film Review: Melt (2023) by Tomoto Jin'ei

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Short Film Review: Melt (2023) by Tomoto Jin'ei

‘I want to become a cicada’

Tomoto Jin’ei’s “Melt” is a short with two sides, much like the tennis ball on which the sister half of the sibling duo draws their parents’ faces. A short, poetic lament on a situation, this sees two young adults remain positive in a bleak situation.

A nameless brother and sister are approaching adulthood, yet seem to laze their days, while their parents are out for long hours, working or partying; only ever arguing when both are at home. This has become a house without love, as the parents’ stresses are deflected on to each other and their children. The siblings, therefore, spend the hot summer days lounging around, playing, but also enjoying each other’s company when out of the house. Home is where the hatred is.

With some beautiful cinematography, this is a film where the outside world is bright, colourful and eventful, while home is a dark and brooding place. Jin’ei portrays a home where smiles start immediately on leaving, with sadness returning to faces the minute they walk through the door.

Drawing her parents’ faces on either side of a tennis ball shows the children both playing favorites, but a couple no longer working as a single unit. Their father is often out drunk with much younger women – a known secret – and so their mother is tired from work, but unloved at home. From the children’s perspectives, they see two adults who are constantly behaving badly, drunk or angry, and taking out their frustrations on them. They want to run away from it all.

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From the parents’ side, however, they see their children at working age, but spending their days lounging around, contributing little but microwave meals. The mother particularly elicits some sympathy as her husband runs around with women less than half her age.

The theme of “Melt,” therefore, is escape, or melting away. The children want the freedom a transient life brings: live free and die young. The final scene sees them release a paper boat into the ocean. Laughing as they do, they want to just disappear. Laugh, as the world around you melts.

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