Hollywood studios will get a lucrative tax break they’ve long sought and movie production workers will get new safety protocols they’ve wanted since the deadly Rust shooting under new legislation that Gov. Gavin Newsom is expected to sign the bill late this week.

It reflects a grand deal between the governor and state lawmakers to address Hollywood’s thorniest political battles in Sacramento in a sweeping bill made public Saturday as lawmakers race to finalize the state budget.

The legislation extends California’s film and television tax credit for another five years with a new refundable feature that allows studios to receive cash payments from the state if their credits exceed their tax bills that California studios have lobbied for years in the face of with competition from other states.

It intertwines the identified safety issue by requiring productions to receive the tax credit, follow new safety rules including hiring a safety consultant to conduct a risk assessment and be on set during filming. For all productions, it requires propmasters and armorers who handle guns to have firearms training and a special state license.

And it adds new diversity requirements that have been a priority for Democratic lawmakers frustrated that Hollywood workers don’t reflect California’s ethnic and gender diversity. Part of the tax credits that productions will receive will depend on the achievement of diversity goals. A larger portion of the tax credits goes to job training programs in community colleges that primarily serve students of color. And the legislation requires adding a new member to the state film commission who has expertise in diversity, equity and inclusion.

It’s the art of compromise and negotiation, to find a solution that works for everyone, said Councilwoman Wendy Carrillo (D-Los Angeles), who played a key role in drafting the bill.

The studios want a refund and have wanted more access to these dollars. The unions have been calling for safety oversight on the set given what happened on the ‘Rest’ set. … On both sides this was a pleasant compromise to see if it works.

Attempts to pass firm safety legislation last year stalled amid disagreements between the Motion Picture Assn. and the IATSE union representing workers in the entertainment industry. They negotiated further this year and agreed on terms in Senate Bill 735, which has been folded into the new movie tax credit bill.

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author of that legislation, Senator Dave Cortese (D-San Jos), said a version of the bill to increase safety and gun protection on movie sets has been in the works since the week after the 2021 “Rest” taping.

He remembered reaching out

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OSHA and the Department of Industrial Relations after the deadly shooting and asked what laws were in place in California to prevent this from happening.

“I thought there would be all kinds of account history,” he said. “But there was nothing.”

This year, Cortese said, after negotiating with the Motion Picture Assn. and IATSE units to assemble SB 735, a conversation began between the governor’s office, the Motion Picture Assn. and unions about including the film safety law in the budget bill.

“There’s a certain efficiency and expediency to getting it done now,” he said.

Cortese said that he will use the Universal and Warner Bros. sets. visited during the drafting of the bill to see how they worked and that the firearms component of the bill is intended to enshrine in law what those top studios are already doing.

“Just because they’re doing it doesn’t mean it trickles down to the rest of the industry,” he said. “We wanted it to be a law, so it applied to everyone, top to bottom.”

The legislation incorporates much of Newsom’s proposal earlier this year to make $330 million in movie tax credits available per year from 2025 to 2030. By making the credit repayable, Carrillo said more companies will be able to take advantage of it, which should lead to more productions. to the Golden State.

Currently, she said, only Disney and Universal Studios benefit from the tax credit because they have higher tax bills in California because of their theme parks. By making it refundable, Netflix, Warner Bros. Discovery, Sony and Paramount also benefit from the program, Carrillo said. Even if their California tax bills are less than the tax credit they qualify for, the new program allows them to get a portion of the credit paid out in cash.

We’re in a very competitive battle to make sure these jobs stay in California, and they’re jobs that primarily impact Los Angeles County and the City of LA, Carrillo said.

The motion picture industry legislation is one of nearly two dozen budget-related bills lawmakers are expected to approve Tuesday as they work toward a final deal with Newsom on the 2023-24 state budget. Negotiations have dragged on as the Democrats who control the Capitol grapple with a $31.5 billion deficit.

Newsom faces a June 30 deadline to sign the budget. By that date, he is expected to sign the series of budget-related bills that lawmakers sent him this week.