Assembly Budget Subcommittee No. 4 on State Administration

Turn on the mic. All right. Good afternoon. Welcome to our Sub 4 Budget Subcommittee on State Administration. Today we are in room 447. We are taking testimony in person and virtually over the phone. We are accepting. I'm sorry. We're taking testimony in person and virtually. We are accepting public comment at the end of this hearing, both in the hearing room and on the phone. The phone number to connect is on the Committee website and should be also on the screen.

If you are watching over the Internet, the phone number is toll free 877-692-8957 to dial into sub four, the public access code is 131-5447 there was a little bit of confusion earlier within sub two. To dial into sub two, the access code is 1315444.

But for this specific Committee, if you're watching over the Internet and waiting to get into the phone line, the public access code is 131-5447. If you encounter any problems, please contact the Assembly Budget Committee at 916-319-2099 and a staff member will assist you. We encourage the public to provide written testimony before the hearing.

Please send your written testimony to budgets of Sub 4 at ASM.ca.gov. Today's hearing focuses on the governor's proposal for the California Film Tax credit, which would extend the program for an additional five years from 2025 to 2030. The proposal includes two new elements, refundability and diversity. The Subcommittee will weigh the costs and benefits of making the credit refundable to capture a broader range of productions.

The Subcommitee also will focus on diversity to ensure that public dollars are reflective of the people of California and our values. Two years ago, while creating the soundstage tax credit, we introduced the diversity work plan to focus on diversity for above and below the line. Below the line being camera operators, production assistants, boom operators, set and costume designers. Above the line being writers, producers, directors and talent.

Today, we continue to push for diversity changes to California's most famous and influential industry through the tax code, with policies that aim to advance racial equity and representation that is reflective of the people of the State of California. During the 2023 Academy Awards, Michelle Yeoh became the second woman of color in 98 years to win best actress at the Oscars for her role in Everything, Everywhere, All at Once, which sounds a lot like Budget Committee. The first was Halle Berry for Monsters Ball in 2002.

That means that for 96 years, the Academy Award for best actress was only awarded to white women. Diversity, everyone acknowledges is important, but there are still so many challenges in making real changes. Crayola makes a special box of brown colors to acknowledge that there are races and other colors across the world. If you pay more, you can color in your own skin color, but these colors are not included in the regular, everyday crayola box.

How do we change that, and how do we change that in the film industry so that we are all included in one box? We shouldn't have to pay to be included. We should all be in the same box. Before we begin, just a little housekeeping. We will begin our second panel at 02:30 p.m., however, if we are not finished with the first panel, we will ask our panelists to stay for additional questions after the second panel concludes. So let's begin with our first panelists coming up.

And since this is an informational hearing, I would like to. Members will be coming in and out of Committee. We wanted it to be open to all Members within the Assembly so that they can hear and be invited and make remarks related to this very important topic. Assembly Member Muratsuchi.

Thank you very much, Madam Chair, for inviting me to join this very important hearing. As you know, Madam Chair, the Los Angeles County delegation recently took a tour of some of our movie studios in Los Angeles that we're very proud of, and we're very proud of the industry. We're very proud of the jobs.

I'm sorry, I had your button. Would you mind starting over?

Okay. Very good. Starting with. Thank you very much, Madam Chair, for inviting me to join this very important informational hearing. We both participated recently on a Los Angeles County delegation tour of our movie studios in the Los Angeles area. We're very proud of having the studios in California. We're very proud of Californians making. So we know that the California film tax credit is a very important measure to support this iconic California industry.

At the same time, I think you and I, Madam Chair, shared the observation that we didn't see a lot of diversity either above the line or below the line as part of the movie tour. And notwithstanding Michelle Yeoh's recent Oscar for Best Actress, Asian Americans and Pacific Islanders, along with Latinos and African Americans and others, continue to push to make sure that our iconic California film industry reflects the diversity of the State of California.

And so I'm very happy to be here, and I look forward to hearing that testimony.

Thank you, Assembly Member, majority leader.

Thank you, Madam Chair. I joined with my colleague, although I'm not from Los Angeles, I didn't take the tour, but I've done it before, and I'm sure I'll be invited to do one of those tours soon. But I do appreciate, especially labor that has reached out to remind us of the work that they are doing and the advances they are making on diversity. And I sincerely appreciate that. Thank you.

Thank you both. Let's begin.

Thank you, Madam Chair. Brian Euler from the LAO. Just starting with a little bit of background on the film tax credit. The state first established the film tax credit in 2009, and it was really in response to concern that competition from other states was pulling the state's film industry to other parts of the country. The state's now gone through three iterations of the program. The second program in from 2015 to 2020.

We're in the current, the 3.0 version of the program, which goes from 2020 to 2025. And now the Governor's Budget has proposed a fourth iteration of the program, which would extend it through 2030. And as the chair mentioned, add this added element of refundability of the credit. So just a little bit on what that means.

Currently, the credit is non refundable, which means that a taxpayer cannot claim any amount of the credit that is above and beyond the amount of taxes that they owe to the state. If you make the credit refundable, that taxpayer can claim more in credit than they owe in taxes, meaning they can receive a refund payment from the state. So to help the Subcommitee in its consideration of this proposal to extend the credit from the Governor, my presentation is going to include two pieces.

The first is our review of the evidence on the economic effects of the film tax credit, and the second piece will offer some comments on considering refundability of the credit. So, first, thinking about the economic effects of the credit, and starting from a high level, we see that both employment and production activity in the state has been at a relatively steady level for most of the past decade. Setting aside obviously dramatic dip in 2020 due to the pandemic, we've had relatively steady unemployment and production activity.

California has continued to make up about half of total industry employment in the entire country, and our industry is far and away the largest of any single state. Based on our review of the evidence, we do think that the state's film tax credit is one among several elements that does contribute to the steadiness of the state's film industry in recent years.

Based on looking at kind of academic research on this question, we think that the state's film tax credit likely results in our film industry being a few percentage points larger than it otherwise would be. A few kind of supplemental points on that one is that the state's film industry being larger in and of itself does not necessarily mean that the state's economy or the state's total employment overall is larger than it otherwise would be.

And the reason for that is that the revenue that is lost to the film tax credit would have been available for other state programs and services. And our review of evidence on the economic benefits of some of those alternatives suggests that there could have been similar or perhaps more economic benefits in other parts of the state's economy. Which means that we can't reliably say that the state's overall economy is necessarily larger because of the film tax credit.

Another supplemental kind of second supplemental point is that a few percentage points larger is certainly a meaningful economic impact from the program. But the flip side of that is that a large majority of the economic activity in this sector doesn't necessarily depend on the film tax credit. And what this kind of suggests is that the film tax credit is not. I should say, the continued existence of the state's current film industry is not necessarily dependent on the state having a film tax credit.

It is adding on the margin to the size of the industry, but it's not necessarily make or break for the continued existence of the industry. And this is important context, we think, for considering some of the policy questions that will be before the Subcommitee, questions about refundability, about diversity objectives. These are important questions, but again, they're not likely to be things that will be make or break for the continued existence of this industry.

They're not likely to, whichever way the Legislature decides, lead to a major change in the size of the economic activity of this industry moving forward. And given that, we would suggest taking a step back, not necessarily focusing too much on the kind of economic competitiveness aspect of those questions and more on more holistic question of what is good public policy with respect to refundability or diversity objectives with this program.

So then, turning to the question of refundability, we think that there's both pros and cons to making the credit refundable. On the pros side, we think making it refundable could lead to kind of greater fairness among the taxpayers that are eligible for this film tax credit.

Right now, with the credit being non refundable, there is differential treatment in taxpayers that allows certain taxpayers to claim more of the credit and more quickly based on things that don't have anything to do with their motion picture production activity in the state, such as whether or not they happen to have sales tax liability in the state, or if they conduct research activities in the state, things again, that aren't related to their production of motion pictures.

And so adding this refundability element could bring some equity in that respect. A second potential benefit is that there is some evidence that refundable credits are more attractive to larger production companies that could bring larger budget productions to the state. Thinking about the con side on refundability, making the credit refundable would both accelerate and increase state costs related to the tax credit, and it would also make the tax credit more complicated and expensive for FTB to administer.

Overall, we think that refundability is something that's worth considering for the Legislature, but with some conditions. Primarily that we think that if the Legislature were to adopt refundability, but with some particular changes to the governor's proposal, you could gain a lot of those benefits that I mentioned while minimizing some of the increased state costs. So in particular, we would suggest if you were to go down the path of refundability, that you could define a kind of a claiming schedule for the credit.

We would suggest somewhat reducing the annual allocation to keep the change cost neutral for the state, and we would suggest finally reducing some of the other flexibilities that are currently allowed in claiming the credit. And I'd be happy to go into more detail on any of those if you'd like, but with that, I'll turn it over to the next panelist.

Thank you, Madam Chair and Members of the Committee, for the opportunity to present here today. The film industry is a vast community in itself, a living network of relationships among millions of Californians. The movies link people through guilds and unions, trade associations and government agencies, production companies, nonprofit organizations and businesses of all sizes. And there's the larger meaning of it all, the movies as an image, a spirit, a reputation, and the recognition of film and television's ability to inspire, educate, entertain audiences all over the globe.

Here in California, we know that people around the nation and the world think of our state as the home of entertainment, with all that implies. It is an important part of our legacy. And the entertainment industry has generated significant economic activity, job sustainability and job creation. But everyone here today has had to face in one way or another, the harsh reality and negative impacts of runaway production. And it didn't have to happen, and it doesn't have to continue.

States and nations are working hard to do everything they can to lure entertainment production out of California by increasing and expanding their tax credit programs. Access to tax credits to offset the cost of production is a primary consideration for where projects will shoot. And they do leave, taking Californians jobs and economic opportunities away from California, where they belong. The CFC tracks produced projects that applied for tax credits but were ultimately denied due to lack of available funds.

Data shows that the state lost 77% of production spending in those projects that applied for but did not receive a California tax credit. 173 productions that were eligible but did not receive tax credits between June 2015 and June 2020 left California the state lost 8.6 billion in economic growth. This lost economic growth does not include all of the projects that did not apply for the tax credit program but also shot elsewhere.

For example, in 2021-2022, 16 out of 28 projects that did not receive tax credits left to be produced out of state and accounted for 951,000,000 in production spending outside of California, a loss to the state's below the line production workers and the businesses that rely on the film and television production industry. Productions that applied but did not receive tax credits between 2020 and 2022 left California to generate expenditures in the following jurisdictions.

In New York alone, 254,000,000, and expenditures in Georgia, New Mexico, Louisiana, Massachusetts, Canada, England, Italy, Ireland, Mexico. The flight of productions to other states and nations in response to competing incentives gives credibility to the assertion that the cost reductions made possible by our tax credit program are directly responsible for keeping many productions here in the state.

To date, 624 approved projects in the California Film and Tax credit program, with an investment of 2.7 billion in tax credits, are on track to generate more than $21 billion in California expenditures since the program started in 2009. These projects hired or will hire more than 69,000 cast, 103,000 in crew and over 1.5 million background players. A recent study from March 2022 by the Los Angeles Economic Development Corporation (LAEDC reported that each dollar allocated by California's tax credit program generated at least $24.40 in output.

What delineates California's film tax credit from incentive programs in other states and nations is its transparency related to sharing data about projects, allocations and resulting economic impact. California's tax credit program is uniquely focused on incentivizing the types of projects most susceptible to runaway production or productions that could potentially be lured away from the Golden State.

California's program is more restrictive than most due to its qualified expenditures provision, which makes tax credits applicable only to below the line wages and payments to in state vendors, not above the line costs, and this makes it a better value for taxpayers. The tax credit program provides statewide benefits both in terms of tax revenues and production, jobs and spendings. It facilitates production across the strait, including a growing volume of filming outside of the traditional Los Angeles 30 miles zone.

To date, more than 60 feature films and television series spent close to 208,000,000 outside the City of Los Angeles 30 miles zone. This spending benefited many small businesses, including grocers, hardware stores, gas stations, hotels, other retail businesses, as well as local hires for services such as catering and set construction, and many other ancillary businesses. In addition, such spending impacted local governments directly via payments made to local police and fire departments, as well as revenue from local permit fees.

The new soundstage program is California's latest tool to improve its competitiveness amid global competition to host film and TV production, and it joins our very successful production tax credit program to demonstrate our state's commitment to remaining the world's entertainment capital. California's film and TV tax credit program promotes workforce training and diversity inclusion. The career readiness requirement mandates that all tax credit projects participate in learning and training programs.

CFC Deputy Director Nancy Rae Stone, who is here with us today, will share more on these programs in her remarks. The program also requires participating projects to have a written policy for addressing unlawful harassment and submit voluntary reported above and below the line cast and crew employment diversity data. Each production must also provide the state with a copy of its initiatives and programs to increase the representation of women and minorities.

The newly proposed program 40 includes a diversity work plan component to promote shared goals of providing equal opportunity in the motion picture and television production industry. The Administration structured this proposal to provide an incentive of 4% of total dollar amounts for project applicants to submit and make a good faith effort to achieve a project specific diversity work plan. This provides an opt in to the diversity provisions without reducing the total amount of funding available for other applicants.

Additionally, the new soundstage filming tax credit program takes an innovative approach to achieving two key goals, the developing more infrastructure and promoting workforce diversity. It demonstrates California's leadership and serves as a model for other states. This is a time of increasing competition as other jurisdictions increase and expand their tax credit programs. For instance, New York, New Mexico, Arizona and others, we recognize we are still early in the budget processing.

The Administration hopes to continue conversations in collaboration with this Legislature on this topic to increase diversity in employment and opportunity to enter the film and television industry while balancing competition with other states and funding availability. It is important we find the right structure to achieve these desired results. Thank you very much for your time today.

If you wouldn't mind taking a moment to introduce yourself just for folks that are watching online.

Yes, of course. I'm Colleen Bell, Director of the California Film Commission.

Thank you.

Hello. I'm Nancy Rae Stone, Deputy Director of the California Film and Television Tax Credit program. Thank you, Madam Chair Carrillo and Members of the Committee for inviting me to speak today, I would like to explain how the film tax incentive program has progressively helped individuals from underserved communities gain exposure to careers in the industry, receive training and support to work in the industry, and will continue to help productions put the issue of diversity in the forefront when planning their productions.

With each iteration, the film tech's incentive programs have increased their focus on workforce development and expanded opportunities to create a more diverse industry Program 2.0 added the Career readiness requirement, which focused on career exposure and it mandated that all tax credit projects participate in learning and training programs for community college, high school and career-based learning programs, and offered such things as paid internships, externships for faculty members, workshops, panels, and professional skills tours.

The CFC works with over 100 schools across the entire state and over 50 work-based learning programs to facilitate these experiences. It's clear from the testimonials that many students provide that they had no understanding of the myriad of careers one can have in the motion picture industry, and that this program has opened up their minds to the possibilities. Exposure is the first step in the journey to finding one's career Program 3.0 in addition to career readiness adds a training component along with other requirements.

Each approved project must contribute a percentage of their tax incentive amount to the Career pathways program. This training component provides hands on training and career guidance for individuals from underserved communities. Multiple training partners also supply mentors, focus on production etiquette, financial wellness, conflict resolution, among other topics, as well as job placement assistance. Even with two years of pandemic shutdown, the career pathways graduated 224 students, with that number expected to double in year 3.

72% of graduates selfidentify with historically underrepresented communities, and already 29% are Members of a union with access to good paying jobs and benefits. The pilot Career pathways program now has graduates in addition to LA, six other counties, which include Orange, Kern, San Bernardino, San Diego, Alameda and El Dorado, and we're looking for ways to expand that list.

The program also requires that each production provide a copy of its initiatives and programs to increase the representation of women and minorities, and these programs are all posted on the CFC website. All participating projects have to submit a written policy for addressing unlawful harassment, and all projects must submit voluntarily reported above and below the line cast and crew employment diversity data, and that is also going to be published on our website.

Per project, program 4.0 would continue the evolution toward a more inclusive workforce by in addition to all the 3.0 initiatives requiring each production to have an intensive focus on diversity when recruiting and hiring.

As Colleen pointed out, the newly proposed 40 diversity requirement invites productions to receive a tax credit award to submit a diversity work plan and as an incentive to opt into the diversity provisions, the Administration proposes that 4% of the total dollar award for each project be placed in reserve until the production is complete and its diversity efforts have been reviewed.

We envision that all taxpayers that qualify for the credit will submit a diversity plan and if they make a good faith effort, they will receive 100% of their award. We're happy to continue discussing this structure to find the right answer to this situation, including non monetary incentives. Please note that other states, such as New York and Illinois, also require diversity work plans without offering any additional incentives to do so, and many states, such as Texas have no diversity work plan whatsoever.

In conclusion, the tax credit program has progressively supported exposure and training for individuals from underserved communities and production company focus on diversified recruitment and employment. Currently, Program 3.0 productions provide information on existing initiatives, focus areas, and organizational affiliations. Many of the parent company initiatives are continuously operational and extend beyond the individual productions, meaning that the benefits of these programs are not limited for use for the productions and the tax credit programs alone, but they operate on a much broader scale.

On a final note, I want to point out that one of our independent productions, Everything, Everywhere, All at Once, which won seven Oscars and helped set the bar for Oscar-winning diversity in its best supporting actor and best actress wins for Asian actors in a story about Chinese immigrants, is in our program. Where better to film this story but in California? And with the help of this program, it happened here. Thank you very much.

Thank you. Department of Finance.

Jacob Kirn, Department of Finance we have no additional comments at this time, but I'm happy to take any questions the Committee may have.

Thank you and thank you to the panelists. We definitely have some follow up questions. I do want to acknowledge the Members that are coming into the informational hearing. I know folks are going to be coming in and out. If there are opening comments or remarks that you would like to make in case you may need to leave before we go into our 2:30, please let me know. Ms. McKinnor.

Good morning. My family worked in the motion picture and TV industry and retired from there. This industry brings great benefits for our community. It brings tremendous economic impact for California. I just want to make and your diversity plans. I like hearing what I'm hearing because we want to just ensure that the workforce looks like California. That is super important to us. And so I understand that the film and TV industry brings lots of jobs. But we want those jobs to look like California.

And then we're not ready for questions yet. Right?

We will be in a moment. I just want to be differential to Ms. Friedman and our chair Ting if they have any comments at the moment. If not, okay, please go ahead. Ms. Friedman. Yeah.

Just because I am going to have to live a little bit early, I want to thank everyone for participating today. I spent 25 years in the film industry. It's what brought me to Los Angeles in 1992 after working in New York in film for several years. Most of my neighbors work in the film industry. My husband was a film editor when I met him. And I was in the industry at a time when we were not producing the kind of content we are now.

When we were producing primarily reality television, it was really lean times for my friends and neighbors. A lot of people left the industry, myself included. And so I really appreciate what the film tax credit has done to help take advantage of the peak content we're experiencing now. But to make sure that a lot of it ends up staying in Los Angeles. I was also in the industry when we first saw film tax credit being used in Canada to lure productions north of the border.

And I remember the toll that that took. I was at a company that did probably, I don't know, we probably did eight films a year in Canada because of that. And so we had some above the line people that we brought up who were American, but almost the entire crew were Canadian. And that was really to the detriment of my community. So making sure that we renew this credit is very important. The benefits go beyond the immediate film industry benefit.

They cross over to the money that goes in to support our schools, to the wellness of people who are able to not leave their family for 8-10 months out of the year to people that don't have to choose between staying with a young child or being able to do their job. It goes to all of the restaurants in the community, all of the ancillary uses. We're seeing a lot of production right now around my community, around my neighborhood, and I love seeing all of it.

So I'm really glad. I would like to say that when I was in the industry, and I was an Executive, women particularly, but certainly minorities, there was a huge barrier to entry and definitely a glass ceiling that you really was very difficult to rise above. And so I do think that the diversity parts that are being worked into this and strengthened are incredibly important.

They're important to make sure that people who are from California, our diverse community, is able to access these wonderful opportunities and not just people coming from other parts of the country, and that the benefits extend to everybody. So I do think we need to be very cognizant of the failings, the past, the insular nature of the industry that's kept people out, the tremendous glass ceilings that have existed.

Everyone always has to be reminded that, yes, people want to see movies that show diverse experiences and feature diverse voices. We seem like we have to remind people of that over and over. But certainly the viewers and the ticket buyers are reminding people of that. And it was nice to see the membership of the academy reward that with the Oscars. So again, thank you, Madam Chair, for hosting this, and I look forward to hearing the panelists.

Thank you. If there are no additional comments, we'll go into Q/A. Ms. Mckinnor, you had a question?

Yes, thank you, Madam Chair. I would like to hear you guys define what is good faith. What does that mean, a good faith effort?

Well, we will look at what the initial goals were for each production. Each production sets their own goals according to what kind of programming they are creating and what kind of opportunities they have, for instance, in the storyline, as well as in hiring their cast and crew.

In terms of the diversity, the amount of women and how diverse their goals will be, we'll look at all their goals and we actually, in our regulations, make it very clear what kinds of goals that we are looking for in these plans, so that everyone knows what's expected of them.

And we look at what their goals are and things like goals to ensure qualified wage parity among all races, ethnicities and genders, considering factors such as level of experience and competency, goals to achieve broader awareness of available positions, goals to interview a broader pool of job candidates or more candidates who have not previously worked on a motion picture for the applicant. Goals to enhance industry access and career development, things like that. Like very specific, what are your goals?

So they tell us what their goals are, and then when they submit their final plans, we look at what they did to achieve their goals. Did they use a crew database that has a lot of diverse crew members? Did they look at cast members of different ethnicities when casting for particular roles? We look at what their original goals were and what kind of effort they made to achieve those goals. And that's how we determine whether they did make a good faith effort to achieve them.

Thank you.

Mr. Muratsuchi.

Thank you.

Thank you. If I can follow up on, you know, when Ms. Mckinnor and Ms. Carrillo and I took the tour of the Los Angeles County delegation to two movie studios. We had a great time, and so I don't want to call out the two movie studios. But notwithstanding the good faith efforts, we didn't see a lot of diversity there.

And I remember having a chance to talk with some of the below the line staff, and it was not only the below the line staff, but there were, like, people there. It seemed like a common thread was people who talked about how they started in the mailroom or they started as interns and they worked their way up in the film industry.

And I don't have the familiarity with the industry as my colleague from Glendale, but I got the feeling that it was a very insular community where even at that very entry level mailroom clerk or intern, that was a way to break into the industry and pursue a career in the dream making industry in Hollywood.

So I would like to see this Committee and our Legislature to explore more specifics into how these good faith efforts are actually translating into what Ms. Mckinnon indicated, making sure that the workforce reflects the diversity of the State of California. Thank you.

Thank you, Assembly Member, Majority Leader.

Thank you, Madam Chair. The one thing that always comes to mind when we're talking about diversity is intentionality. If you intend to make it a diverse workforce, you will take steps that are necessary to make it diverse. If you want it to just happen, because the people are going to apply, you're not being intentional about it, and it's not going to happen. It hasn't happened for how many years.

So I think that being intentional about the diversity, and I appreciate the question about what is good faith. If I say I'm going to accomplish 1, 2 and 3, and I'm the one that said what I'm going to accomplish, well, then when you ask me in a year, I accomplished everything because I set the bar, as opposed to it being set by the Legislature, tied to the very tax credit. So the diversity issue is extremely important.

Opportunities must be provided to so many others that look like the rest of California. And I just look here on the Committee Members that are sitting on sub four. This is California. Thank you.

Thank you, Madam Chair. Just a question. I know that when we passed the Film Tax Credit 3.0, that's mentioned in the staff analysis in 2018, we had put some diversity goals in there. Can you give us a sense of what diversity metrics were achieved since then from 2018 till now?

You're talking about 3.0. Well, so far we've only had 15 projects that have gone through the whole program. So we are looking at those metrics right now, and we will be publishing them on our website.

When will that be published?

Probably in the next couple of weeks. Yeah, we're just going through the final audits right now and gathering up the statistics.

And is there a reason that we need to rush this renewal or this extension now versus after we get some more information on that diversity?

Well, the reason for this is provides certainty to the industry that this Film and TV Tax Credit program will be extended for an additional five years. And that does count for a lot for decision makers. Whether or not projects can receive a tax credit is one of the primary considerations of where they will shoot. It's just a fact. And so this provides decision makers the ability to plan more long term, and with that could come infrastructure investments and other types of investments here in California.

Thank you. I really appreciate that point about certainty and can understand that. I think you heard from the entire panel a certain desire for certainty that you are going to be employing a diverse workforce that not only behind the camera, but in front of the camera, which traditionally we haven't seen. And yet when we are asking for that, I don't think we're getting the same kind of certainty that you're asking.

It's going to be very-we appreciate the spirit of this diversifying the entertainment workforce pipeline. And this industry is extremely important. Creativity flourishes when people are free and people are included. And that is the spirit of the State of California. So we want to make sure that we get there, too. And how we craft this will be very important so that we can achieve these desired results while also being compliant with the state and federal laws that exist.

I guess, again, what's been certain is this Legislature has enacted three different times, three different levels of tax credits. That's factual. The other fact is you represent an industry that hasn't historically been diverse, that hasn't historically represented the diversity of California. That's a fact, too. Those are the facts. Right. And so I understand your desire for certainty, but we can't go back to our constituents and tell them why we put money in your pockets when the money could have gone-

You know, I was just up here earlier, we were talking about childcare. We were talking about preschool and people not being able to get childcare. So we have to tell the childcare people, hey, sorry, we couldn't give you money for childcare because we gave money to the movie studios and we gave money to the movie studios because of X, Y and Z. So that's the challenge.

And I think you're hearing all of us talk about a particular issue, and I can't understand why the first three down payments didn't cover any improvement in diversity. I guess, is it because we're not a diverse state or LA is not a diverse city? I mean, I'm trying to understand what are the challenges we're facing.

Well, in 3.0, there were adjustments made, and particularly in adding this training component and providing diversity reports. And then 4.0 moving forward, there's even a more robust discussion about how, again, to get to these desired results. To your point. Absolutely. I think everybody is in agreement that there's more that can be done.

And you do see that all of the major studios and their DEI programs and initiatives that are taking place, and even small independent, and you also have private investment firms that are building stone sieges here in the State of California that also have DEI initiatives. So collectively, all of us together, we all want to get to the same place. We just need to figure out how to get there and as soon as possible, because again, that's where we would all like to ultimately be.

But again, the extension was passed in 2018 at the same time that a tax credit was already in action. And five years later. Right, we're five years later now we can't get any data on people trained on employees.

When we launched 3.0. So we're waiting. So you have to go, the projects, go through an audit process, and once they're through the audit process, then we'll be able to take that aggregate data and then we'll be able to share that data. And we're very much looking forward to being able to do that.

But again, 3.0 was on top of 2.0 and 1.0. The studios could have been already doing diversity work, but you have no data you can share with us about the progress at all?

We did share data in our progress report as far as diversity goes for program 2.0. That is on our website.

Could you tell the Committee, please.

I don't know what that data is. I don't have it with me, but it is available on our website.

Can someone on your team get that information to you right now?

But that data is like 10 years old.

Why is it 10 years old? How come it's not up to date?

Because it's from program 2.0. I mean, what we need to do is look at the data from 3.0 when we actually started, when the whole DEI has been gathering forces and really being put in progress.

My recommendation, again, I'm just one member, right? My recommendation would be, until we can get facts and figures back from the industry, we shouldn't be acting on this seems premature because we have people that need jobs. We have people that want to be part of the industry. And you're asking us for certainty when you're giving us none.

If you're in my position, someone comes to you, they want to shoot a TV show, you're like, okay, we'll do it, but we're not sure if we can put the money up. How does that discussion go?

We'd be happy to give you our 2.0. We'll take it from the progress report. And as I said, our 3.0 data will be. I'll send you that as soon as.

It's just very extraordinarily disappointing that you're coming to the state Legislature knowing that this is one of the topics that a number of legislators care about without even being able to factually address it. I'm not talking about goals. I'm not talking about hopes and dreams and desires. I'm talking about people. How many people have been employed? How many jobs have been created? What's the diversity of your workforce? These are facts. You're asking us for facts and figures. That's what the proposal is.

You're asking us for money to help you employ people, and yet you stand in front of you sit in front of here without being able to say anything about the progress on the diversity of your workforce or your projects. So perhaps we should be recessing and coming back when you're more prepared.

Well, I do have some demographics from our career pathways program, if you're interested.

And can you tell us what that is, please?

Sure.

What is the career pathway?

We had 224 participants.

Can you tell us what the career pathways program is?

Yes. The Career Pathways program is a program where our productions contribute 0.25% of their tax credit amount to a training program for people from underserved communities. We have many training providers that work with these individuals. We've had 224 participants so far, 31% of them 224. And I could send you this.

I know how to take notes. Great.

31% have been female, 48% have been male, 29% are African American, and 26% are lLatinx or Hispanic. And these are all self reported. 37% are between 25 and 34. I'm just kind of giving you the main statistics. 35% earn less than $10,000 when they entered the program, and 34% of them had some college but had not graduated.

Can you give us a sense, you mentioned 25% of was it the tax credit went into this program?

0.25%.

0.25%. Can you give us a rough dollar amount? Was that?

Well, it depends what your tax credit is. So it'd be 0.25%.

But when you aggregate this information-

So if you're a $2.5 million tax credit, you'd be paying about $6,200.

Well, you got 200. I'm just trying to understand how much money went into the 221 participants.

I don't have the exact amount of money.

Roughly, was it like 5,000-10,000? Was it a million?

Jacob Kirn, Department of Finance. So it's 330,000,000 in allocations per year. So of that aggregate 0.25% would be going into the career pathways program. So that's about $1.0 million a year.

$1.0 million a year. And this was 221 participants total or annual?

224

Total? And then for how many years was that?

For the past three years.

Past three years. So that's about $3 million.

Well, you have to understand that during the pandemic, this program was severely impacted.

Fair enough, sure. And it was only in existence for three years, so maybe it was $1.0 million. Okay, so at least then we're starting to understand what some dollars and cents. But I think what we would like to do is get a better indication as to if this is the only thing that's being done or this is just one of many things that's being done. I think what we need is more information. Otherwise, I don't think I have the ability to really act on this.

Well, in addition to the career pathways program, as I said, we've had hundreds of people go through the Career Readiness Program. They've been worked as paid interns, and a lot of them have gotten the connections and the workforce training to get jobs in the industry. So a lot of people have been, and again, I can give you the numbers of people that have participated in the career readiness since its beginning in program 2.0.

I think that would be helpful. I think that this is something that otherwise it's very difficult to evaluate the efficacy of the pool. And then with 4.0 what are we talking about in terms of job creation?

In terms of 4.0, how many jobs would be created? Well, I went through, so the baseline again is 330 million. And so we can go back through some of the statistics that I gave earlier in my report just to give you an idea.

Thank you.

If you would like for me to do that.

That would be wonderful. Thank you.

Sure.

Give me two minutes here. Let's see. We shared. Okay. All right. In terms of programs, 1.0, 2.0, and 3.0, to date, 8.2 billion in qualified wages went to 220,000 Californians working as cast and crew members hired. And there were 1,465,000 background players hired. And these figures.

Extras? Is that extras?

Yes, these are stand ins? Yes. And these are mandates. But I also would like to also point out that these figures don't include the salaries of those in above the line jobs. Performers, directors, producers, writers, composers, music supervisors, all of whom worked on these productions here in California because of the tax credit and spent their income here, paid taxes and supported the state's economy.

Which is great, and for those 220,000 jobs, do you have a sense of any other demographic breakdown of them?

We don't have data from 1.0 and 2.0. And again, we're working on the data for 3.0.

Got it. But you have the number of people you just don't know. You can't give it a sense of who they are.

And we will be able to, because now that 3.0 is launched and these gone through the audit process, the projects, then we will have that data. We will have that data. And again, 4.0 as they're working out a diversity provision and crafting a diversity provision.

But I guess it's almost like I don't know why the diversity provision needs to be part of a tax credit. We've already done our part. And again, it doesn't feel like the industry has done their part. And if I'm wrong, I would hope I'm wrong. I'd like to be wrong, but you all coming here today without any information makes me very disappointed.

I would invite you to go to our website and look at all the website.

I don't have time to go to your website. I'm sorry, that's actually very insulting. You're here in front of a legislative Committee. Okay, so then why don't you go to our website? If you would like a tax credit, you can look at all the previous tax credits

I'm happy to send you all the diversity initiatives that we have on our website, that all of our production.

I don't care about the initiatives, I care about facts and figures. I don't care about nice words written by your communications people. I want to know people. I mean, that's why it's even disappointing to know that you counted these 220,000 people, but you did not go to the next level to break down demographically who they were.

It's having access to that data as.

Well because you have the numbers 220,000 people.

Right. But that would assume that everybody has self reporting and we don't have that data. But again, we're also talking about the projects that are in our film and television tax credit program. There is other production taking place here in the State of California. We don't have much data on that.

Well, you got very excited when I asked you about how many jobs critics. You start rattling that off very quickly. Right? But you couldn't tell me who they are. Sorry, go ahead.

No, I was just going to say, which is why we are having these very robust discussions about how this was discussed. There can be more diversification.

I'm sorry, this was discussed five years ago, California.

This was discussed five years ago. And the fact that you're coming today, five years later, with no information, no data, asking me to go to your website. Okay, so you know what? Maybe by the time you come in May or June, I'm sorry, I don't have time to put your information to budget because I'm too busy looking on your website for the information that you didn't give me. So I'll be on your website.

We'll be happy to send you the data that we have.

I won't have time to be in Committee working on your item. Can I ask about refundability? What's the point of refundability? I'm trying to understand. Is that going to get us more jobs?

Yeah. So. Jacob Kirn Department of Finance. So refundability is really centered around increasing the competition of this tax credit so that more business types are able to use it. Right now you may have a business that doesn't have any tax liability in one year, but they still make the expenditures in the state to be worthy of the credit. They're just not able to use it because they don't have that tax liability.

And we've also got from our analysis, it looks like as many as two thirds of other states offer more generous tax credits in terms of they're accessible by a company that has no tax liability. So whether that's, they're transferable, which ours generally aren't, unless you're an independent film or they're refundable or they're grants. There are a lot of grants as many as 15 states offer grants or rebates.

So this is just kind of leveling the playing field and sort of allowing more California businesses that we intend to be able to use these credits to actually use them.

How many more jobs would be created because of refundability than are created now?

Well, I mean, the idea would be that by offering refundability, the businesses would be more incentivized to apply for the program and expend in California at the current moment. You can imagine a production that wants this credit, wants to be able to use it, but doesn't envision that they're going to have tax liability in the next however many years, even though they would make the expenditures on the production that they are planning.

And because they see, well, I could go to California, but I don't anticipate that I'll be able to use this credit. Or I could go to New York and they have a refundable credit well I'll go produce in New York. So the idea would be that we would retain more of these projects in California because they would have more assurance that they'd be able to use the credit.

And I guess. Do you have any economic analysis saying how many jobs might be retained or how many shoots or films or TV shows?

We do not have specific figures regarding how many jobs might be maintained. I could possibly get something to you on that. It would be a percentage. So we have a percentage of films that we believe, despite meeting the expenditure requirements, are unable to use the credits. This is based on past program data where we saw a certain number of credits that ended up being certified but were not eventually used, actually, because we think the company had no tax liability.

And so we could potentially try to estimate what percentage of jobs would be created, but we don't have a number right now.

Sorry, go ahead.

No, Chair Ting, we do have the congressman on the line for our second panel, so it's totally fine. We don't want to lose the time crunch.

Okay.

If you could give us some data or some understanding as to what's going to happen around that refundability issue just because we haven't done in the past. So we're just trying to understand what we're getting for that increased benefit.

And we clearly have a lot more questions and comments. So we're going to go to the congressman for comment, but please stay for additional questions and one additional comment from Ms. Friedman before she leaves.

Yeah, I'm sorry. And I do have to go. So it's more of a comment overall. I do very much appreciate Chair Ting's line of questioning. And I do hope that some of the following panels will be able to maybe give more information. I would suspect that there's a deeper understanding of some of the changes based from the people who are working day to day on these crews.

I just want to say that when I was in the industry wasn't that long ago, I guess it was in the 90s and the 2000s. It was clear that the industry had a diversity problem. This has always been an industry that's very, very hard to break into. Nepotism is rampant in the industry, both on the more prime, below the line jobs, but certainly above the line and certainly reflected in the executive suites in the industry.

And I will say that it's anecdotal, it's not something that I've studied or have data on, but I see a pretty profound change as well, just anecdotally, with people that I know who are now working in the industry, with what we've seen reflected with some of the above the line members also.

And I can tell you I've got a neighbor who's a very prominent TV Director who pretty much left the industry because he said that he can no longer be hired because he's a white man, which I know is not true, but it is good to see that people are recognizing that there's more of a desire from the industry itself to find people of color and find women to be in these roles, but certainly not enough.

And I do hope that other panelists can come up and give more information. I will say that having a paid internship program, as they are drawing from our communities, is something that did not exist at all when I was in the business. And having that pipeline is really a huge change from the way it used to work, which was having to know people or figure out how to get your foot in the door was not easy.

I do want to say that all of that aside, this tax credit, its impact cannot be overstated to California and certainly to my area in Los Angeles.

And the ability to have the production and the growth that we're seeing with studios expanding their operations, and the economic development that that's offering in our communities, and the growth at a time when people are looking for upwardly mobile jobs, when they're looking for creative jobs, that give people a creative outlet, which is what a lot of people come to California for when we have wage stagnation in many of our areas.

This is one area where, if you can get in, there's actually the chance to be fulfilled artistically, to have upward mobility, to really have a chance at incredible opportunity. And this tax credit is very, very important to root all of those opportunities in California. So I very much would like to see know get through the Legislature and get extended.

It's very important and I think that all these conversations within it, it's a great opportunity to have those conversations and to make the program even more powerful in terms of reflecting our diversity. And I look forward to seeing this move through the Legislature. Thank you.

Sorry, we do have to go to the second panel. Thank you. Ms. Friedman, there was a lot said here. We're going to go to our second panel. I certainly have some follow up questions. I know that our chair does. We want to welcome Ms. Assembly Member Wicks to the Committee. And I know Ms. Mckinnor also has additional questions as well. I think there's a lot more that can be shared.

I did actually go to the website, the 2022 report to the Legislature on diversity, just to share some information with my panelists, the Members on the dais now, and also Assembly Member Lee welcome. Appears to be a really great report, but not on the California film tax credit program. It is diversity reports outside on every other production, on other reports, cumulated information that is important to know about the industry, but it's not related to this program.

And so as I have asked in the past, information, data, statistics, that's what we need. If the information that you have said from crews that are hired are done on a volunteer basis. Right? That means that you only have a percentage of folks that are willingly giving you the information on the data on this program and the California Film Tax Credit program. My question to you is, and you'll have more than about an hour to figure this out.

If you can get the information, what is the percentage of the volunteer data that you have received from crews on this program that will be able to help us figure out and understand what your diversity currently looks like? If the information is only on a volunteer basis, based on an application packet that I get as a crew Member. Right? So I'm going to put my information there and that information is voluntarily given to the film Commission.

Out of the stacks of information that you have, what is the percentage that you get back? Because we want to have a clear understanding as to what that looks like and we want to be supportive and helpful to ensure that our goals within the Legislature are met, but that we have a partner in the film Commission that does more than tell us, go to our website. So I'm going to let you sit on that for a moment.

We're going to go to our second panel for now, and then we'll go back to questions. Right now, we're going to hear from our diversity panel, Congressman Joaquin Castro, who has been leading this conversation across the country, much like the LAO, the government accountability office, the GAO, he commissioned, the workforce diversity, Hispanic workers are underrepresented in the media, and more data are needed for federal enforcement efforts.

And we'll hear from him and other panelists working on this issue for the State of California and across the country. Let's begin. Congressman Castro, are you on?

Thank you. Yes. I hope you can hear me. Thank you, Subcommitee chair Carillo, budget Chairman Ting, and also Members of the Subcommitee. It's great to be with you. Thank you for hosting a Texan just for a few minutes on the California Legislature. Hollywood is still the main image defining and narrative creating institution in the United States of America, and therefore, arguably the world.

And I want to speak first to a little bit about why that matters and the efforts that I and others in the federal Congress have undertaken in the last few years to try to help move the industry along in terms of reflecting the full face of America and being truly inclusive, and then perhaps make some suggestions about the road ahead.

First, I started a lot of this work in 2019 when I was chair of the congressional Hispanic Caucus and a madman drove 10 hours from Dallas Del Fosa and killed more than 20 people because he labeled them as, quote, Hispanic invaders to Texas. And I asked myself at the time how somebody ends up in their own minds with that misguided belief, that very ugly belief.

And it occurred to me then, thinking about all of the different factors, that it wasn't a single thing or a single institution that was to blame. But I think several things, including mass media. And so the fact is that over the years, Hollywood has been a very exclusive industry, an industry that has not been inclusive at all, not been inclusive of Latinos historically, of African Americans, of Asian Americans, and of women.

To give you an example in the last point on that in 2018, 2018 was supposed to be a banner year for women in directing, for example, women directed 10% of the major studio projects in that banner year. And that was just five years ago. I do agree that things are moving along, that things are slowly improving, but the industry still has a long way to go.

And so I commissioned over the last few years a GAO report that showed of the major American industries, the media industry, including the entertainment industry for Latinos, is the one where they are the most underrepresented and where the Latino workforce is concentrated in the service sector of the entertainment and media industry. And so part of the reason that matters for a state like California or a state like Texas, our states demographically, as you all know, are fairly similar. They're 40% Latino.

California has a much larger Asian American population at about 16 or 17% of the state. Texas actually has a larger percentage African American population at about 12 or 13% of the state. But two states that are very diverse.

The reason it matters is because if you have an industry, any industry, but we're talking about the entertainment industry, where groups have historically and continue to be excluded, what it effectively means is that certain taxpayers are subsidizing their own exclusion when that industry is given tax breaks and abatements.

So for a Legislator or somebody making a policy decision on a Bill, what it means when a tax credit Bill or a tax abatement Bill is presented before a Legislator who is going to vote yes or no on it. If you're representing a Latino district in Los Angeles or San Diego or somewhere else, and Latinos are only getting 5 or 6% of the work, and your district is 60% Latino, you're essentially asking your taxpayers to subsidize their own exclusion.

They're not benefiting very much from the industry. Now, you can talk about secondary effects and tertiary effects, but I would bet that if they're not getting on screen work or they're not getting work as grips, they're probably also not getting the big catering contract either. And so there is a real reckoning that I believe the California Legislature has to face with the industry. Now, the industry, no doubt, has been economically beneficial to California and continues to be widely beneficial to California. My argument is not that it's not.

My argument is that it's very concentrated in terms of who's benefiting and for many legislators, that should be incredibly concerning. And so I also want to point out that it's not just a studio issue. This isn't just an issue of the Motion Picture Association or the studios. It's also a labor issue. It's also a guild issue. It's a talent agency issue. Let me give you an example.

In 2019, I led a delegation of about seven Members of the congressional Hispanic Caucus to Los Angeles to visit with studio heads, with talent, with the DGA, SAG, and others. And when we met with SAG after, at the time, I asked him a very simple question, kind of like Chairman Ting you were asking today of the previous panel.

I asked for basic numbers, because my belief, after all this work, and even before I'm in my 21st year of public service, I spent 10 years in the Texas Legislature. I am now in my 11th year in Congress. Is that for an organization? The baseline test for whether an organization is going to be collaborative and cooperative, and wants to solve a problem is whether that organization is transparent, whether they are willing to be transparent.

And so if an organization is not willing to be transparent, then to me, they're not going to go solve the second part of the problem or the real meat of the issue. And so, fortunately, SAG has done that since then. But in 2019, we asked SAG, hey, guys, what are your numbers in terms of membership of Latinos, Latinas, African Americans, Asian Americans, so forth? And they said, we don't keep demographic numbers for our membership. And they have since rectified that, I believe, and changed that.

But to me, that was astounding in a state like California, as diverse as it is, and a little bit of commentary here, but as progressive as Hollywood is made out to be, that these organizations would not even keep basic information. Look, at some level, and at some point, you got to say that this is kind of a purposeful obscurity that folks are engaged in. And so transparency is important, but also holding accountable not just the studios, but the labor unions.

Let me speak to that a little bit. I've been a strong supporter of labor throughout my time in public service, both in the Texas Legislature, often going against the grain in what was a very conservative Texas Legislature, but also in the federal Congress. But the numbers that I've seen out of the entertainment unions in California leave a lot to be desired. The membership of the unions in the numbers that I've seen do not represent the demographics of the State of California.

And let me tell you why that matters for you all for a second, and why that's important. Because taking the Latino community as an example, you're kind of locked out of both sides. You're locked out of the studio side, the corporate side, because you're only getting, like, between four and 8% of the work. But you're locked out of the other side, which is the behind the camera side.

And part of the reason that's so pernicious is because there was a generation of Californians, my family is from Texas, but the same thing happened in Texas, where our folks, our communities were told they were tracked away from going to college. This happened with African Americans as well. They were told that they weren't college material, that they should go work with their hands. So we have a lot of people in our community that work with their hands. They work as carpenters.

They're doing jobs that involve manual labor. That is what a lot of the entertainment union jobs consist of. And yet they are essentially, I don't want to say they're locked out because they're not locked out completely, but they're not represented at the numbers that you would expect for a population that has been, quote unquote, working with their hands intensively for generations now. So you're locked out of both the Executive and studio side, and you're minimized on the other side.

So there's a lot of work to do on the studio side, on the labor side, and then also on the talent agency side. And I know I'm running short on time, so I'll close with just one more thing. But on the talent agency side, those numbers are perhaps the worst. You're down to just about, really. I mean, you have WME and CAA, which are the two huge ones, but you have three or four that are sizable.

And the number of folks from underrepresented communities who are talent agents there is abysmal. And let me sum it up for you this way, because I know the oil and gas industry in Texas is often a punching bag, really, across the nation. The oil and gas industry in Texas is more diverse than Hollywood. The oil and gas industry in Texas is more diverse than Hollywood. And so there's a lot of work to do.

And fortunately, you all are in a Legislature that can work with the industry to make these changes and make these improvements happen. You're not in a place that's so super conservative that they think diversity inclusion is demonic and so forth. Right? So you all have an opportunity to actually do something about these things, and I sure hope that y'all will take it. Thank you.

Thank you, Congressman, it's so great to see you virtually. Thank you for taking the time. Wouldn't want to mess with you in Texas, I can tell you that. Based on all the conversations that you've had on the federal level and your visits to California, the discussion that you're hearing today, do you have recommendations that we can take on when we're looking at this particular credit?

Knowing also that California is in competition with other states, your state included, how we can actually maximize the opportunities that we have to address both the studio side, the labor side, the agency side, and how we could move an agenda forward that really is more inclusive not only of the people of the State of California, but really the country and how those narratives and stories are told.

Sure. And I want to reiterate that I think the industry is good for California. It's an economic generator for California. I think the debate is not around whether it is economically beneficial for the state. It certainly is. The debate is around the inclusion of many groups of people within that prosperity, and that's the work that remains to be done.

And so the first thing is, I would hope that, as I mentioned, that the issue would be approached as, in addition to a studio issue, that it would be approached as a talent agency issue and also as a labor and guild issue. I think Hollywood is really a group of different interlocking entities, and to achieve diversity, you really have to be able to crack through and change each of those different entities or help improve each of those different entities.

Otherwise, what happens is that each one will throw up its hands and say, for example, the studios will say, well, the talent agencies don't send me anybody to audition that's Latino or that's Asian American or African American, whatever. So you got to work on each one. So something that works on all of those. And also that you all would help build coalitions with federal partners and with local partners to tackle this issue. You're right that there is a competition among states.

There are a handful of states right now that offer really generous incentives. Texas is not one of them. Although there is a Bill that's going through the Texas Legislature being considered right now. And it should not be a race to the bottom as states, we should be able to get commitments from the industry on these issues without just having to outbid each other and give away the store, the shop, without getting anything in return for a lot of the communities that many of us represent.

Again, if you're representing a community, for example, that my district in San Antonio is now, I think, like, 68% Latino after redistricting, at some point, it doesn't make sense if that community is being excluded to vote for a tax credit. It just doesn't. Right? I mean, businesses talk about going by the numbers. Okay, let's just go by the numbers. So I hope that you all would work on that.

And then also, finally that, on these issues, that California would continue to be a leader in the industry and in helping guide the industry towards more inclusion. Again, there are a lot of states that are simply not going to do that, that are not going to try to be helpful. You all have an opportunity, I think, to lead and to really help change things for the better.

Thank you so much, Congressman. We appreciate you taking the time. There are one question, a question from our Chairman.

Congressman, really appreciate your comments, and I think you are absolutely right. It's about inclusion and it's about who's benefiting. There's no question, as Californians, we're all huge fans of the industry. It's been a great economic engine for us. What advice would you have? What have you seen, maybe that other states or other places have been successful at really pushing greater inclusion. A number of states have tax credits. Obviously, we're debating whether we're going to continue ours.

But like you had said, there's not a lot of transparency, not a lot of information. Would love your advice or your thoughts on what we can continue to advocate for.

I think, Chairman, to be honest with you, Chairman, you all are at the forefront of the change. There are states that give the tax credits away, no questions asked, including questions on diversity. And so I would argue that if there's going to be change, it has to come from you all. It's got to come from California and maybe a few other places. I spoke to Governor Michelle Lujan Grisham, whom I served with in Congress, because, as you know, New Mexico also offers some generous tax credits.

But, yeah, I mean, there's just a few states where I think this change should industry. You can't have an industry that's based in California, but it's hiring like it's based in Idaho. Right? I mean, it doesn't make sense. And also, by the way, California, I mentioned that Hollywood is the main image defining and narrative creating institution.

California is also blessed to have what I would consider the number two industry that's image defining and narrative creating, which is social media and the tech industry, which is catching up very quickly, I think. So you all are in a very unique position to be able to help not just Californians, but the nation.

Appreciate that. Thanks for your comments, and thanks so much for you being here today. Really appreciate it.

Thank you, Congressman. We are going to go to our second panelist, Dr. Anna Christina Ramon, Director of the Entertainment and Media Research Initiative at the UCLA Institute of Research on Labor Employment and is one of the key authors of the UCLA Hollywood Diversity Report.

Thank you. Thank you to Chairwoman Carrillo, Chairman Ting, and to the Subcommitee for inviting me today. The work I will be discussing is part of a major project on the entertainment industry conducted at UCLA with my co researcher, Dr. Darnell Hunt, Professor of sociology and African American studies, and most recently, the Executive vice chancellor and provost at UCLA. Our research examines diverse representation in TV and film and its relationship to the bottom line. You may ask, why is this research important?

And my panelists, the panelists that have spoken earlier have talked about this a little bit, but it's important to underscore that the images we see on screen permeate throughout our society. Films and TV are not just entertainment. Media acts as a dominant socialization agent. Visual media teaches us how the world works and our place in it. In our culture, media consumption has become an essential part of our daily lives. Some might say they know the difference between reality and entertainment.

However, this type of socialization often happens in subtle and covert ways. What you see often becomes a part of your memory and thus a part of your life experience. Part of the issue is that repetition without supporting evidence often leads to acceptance. So even if you do not experience something firsthand or have evidence to support a claim, if you see and hear about it over and over again, you will begin to believe it is true.

In recent years, this phenomenon has been well documented through the disinformation campaigns on social media and broadcasts that have dominated politics and public policy. Gerbner and Gross's cultivation theory argues that increased media consumption may lead to distorted ideas about reality and perpetuate stereotypes. So you can see how racial and ethnic minorities can be vulnerable to this distortion. Repeated, negative and demeaning stereotypes can become the dominant narrative that define a group of people. How about when a group is rarely represented at all?

Gerbner gross state that if representation in the fictional world signifies social existence, then absence means symbolic annihilation. The erasure of a group or the limited visibility also denote the importance that the group carries in society. So even if not completely annihilated, the group clearly is shown to lack status and power when they are represented in a limited manner or relegated to the periphery in media.

Thus, seeing people of color over and over again through onedimensional portrayals that are stereotypical about their respective group leads people to believe that this representation reflects all people from that group. For example, if media images primarily show latinx people as newly arrived immigrants who do not speak English, the dominant narrative is that almost all of latinx people are foreign born, when in fact 68% of the US latinx population was born in this country and 72% of all latinx people living in the US speak english proficiently.

The narrative matters. Now let's look at the NL research that we do on film and TV. As mentioned earlier, our UCLA Hollywood Diversity report examines race, ethnic, and gender representation in front of and behind the camera and how it relates to the bottom line. Our report covers trends from 2011 to the present. We will be releasing our next film report covering the year of 2022, next week on March 30.

But today I will be discussing our most recent data that has been published that deals with the 2021 film year, but I can also give you a little bit of a preview. During the Q and A, the pandemic shifted much of the way that films were released after March 2020. So in our last two reports, we examined both the top theatrical releases at the global box office and all the streaming releases on the major platforms.

In the report we released last year, we examined 252 English language films from the year 2021. A little under half of these films were released exclusively on streaming. The trends we found continued what we call a tale of two Hollywoods. The push for diversity in the past several years has increased the overall number of people of color in total film roles, but that has not translated to increased representation behind the camera.

In 2021, people of color collectively continued to claim an increasingly larger share of all top film roles, at 43%, mostly due to the increase in the share of black actors, while other groups have remained relatively flat over the years. Despite some minimal gains, people of color remained underrepresented, especially behind the camera. They made up only 30% of film directors and only 32% of film writers. Women made up about 22% of film directors and about 34% of film writers.

But as a preview, our report next week will publish results where we examined theatrical and streaming releases separately, and much of the gains we saw in the data that I just gave you were likely due to streaming content. In the end, who controls the narrative and writes the stories has the power to shape the culture. One of our most consistent findings since we started examining films in 2011 is that diversity sells.

Films with casts that have at least a few people of color in the top eight main cast roles tend to perform better at the global box office. In contrast, the least diverse films with only one person of color or with all white cast have the lowest global box office. People of color continue to boost a theatrical industry that is struggling, particularly during the pandemic.

In 2021, people of color were responsible for the majority of opening weekend domestic ticket sales for 6 of the top 10 films at the box office, and of these 10 theatrically released films, 8 had casts that were greater than 30% minority. To give you a recent example, Scream Six, a latina led film with a diverse cast that opened at number one a couple of weeks ago, had 62% of its ticket buyers be people of color.

Further, households of color made up a disproportionate share of those viewing each of the top 10 films that were released on streaming platforms in 2021. So overall, the takeaway of our study is that increasingly diverse audiences prefer diverse content. Understanding the audience that is critical to your business would make sense for those making greenlining decisions in Hollywood. However, Hollywood is further behind most other global industries in terms of its diversity among its most powerful decision makers.

Decisions about what types of films to make, the size of the budget to assign to them, how they will be marketed, and who will be at the directorial helm are all made by men and women who occupy Hollywood's executive suites.

In 2020, we examined who occupied the Executive ranks and found that these decisions continue to be predominantly made by white men at the 11 major and mid-major studios. In the five years previous to that, when we last examined the executive suites, the only noticeable improvements that we found in 2020 were that the unit head level was slightly more diverse, but still overwhelmingly white. The main beneficiaries have been white women at that level.

Slow, incremental progress is not acceptable in a state and a country that is increasingly diverse. Hollywood has to be held accountable. It has no more excuses left. Because diversity is good for business. It needs to invest in its consumers that continue to support them at the box office, on streaming platforms, and when they pay their state taxes.

Studios that receive tax credits for filming in California should have to show their productions are employing people of color and women at all levels, from below the line, all the way to the executive ranks. They should make a commitment to meet diversity goals, and especially also meet some diversity goals on their boards within a certain number of years to reflect the state's population.

Hollywood may say that they have a pool problem where they can't find enough people of color that are qualified for roles throughout their business. But it's more of an opportunity problem, because limited opportunities only allow a select few to make it. Studios need to create opportunities for people to apply for these positions. They need to invest in ways that will ensure people of color and women feel welcome and that they are promoted once they work there.

The state can help by supporting education programs and work programs, but there's one program in particular that I'm familiar with that I know is very successful. It's called the Youth Cinema project that's run by the Latino Film Institute. These types of programs pave the way for Hollywood's multicultural future. These future investments are key to sustained progress and change in the entertainment industry. Thank you.

Thank you, Dr. Ramon. We are going to hold off on comments and questions until we hear from our last panelists here on this diversity panel, Mr. Kyle Bowser, who is a Senior Vice President of the NAACP Hollywood Bureau and a former creative Executive. Mr. Bowser.

Thank you, Assembly Member Carillo and Chairman Ting, for this opportunity for the NAACP to share thoughts on this very important issue. After listening to Congressman Castro and the previous speaker as well, I'm a little bit afraid of being redundant. I've heard some things today that are very reminiscent of the things that we talk about all the time. It is important, I think, that, as Dr. Ramon stated, I think it's important for us to examine why this issue of diversity is necessary to dig into.

I would like to borrow the term from the industry and zoom out, if we could, and look at the inception of this industry. We need to understand that this industry does not reflect as much as it is an extension of the social experiment that is America. And what I mean by that is this. Any society has a dominant group that sets a standard, plants a flag, and calls the space that they occupy normality.

And all other groups are otherized and made to navigate their way as close as they can to some proximity to that space called normality. Hollywood plays a very crucial role in that scheme. Hollywood perpetuates imagery, as was said earlier, that it goes global, and it not only establishes in the minds of onlookers what any particular group, how that group might be interpreted, but it also causes internal examination of self identity. And so without diversity, what you end up with often is distortion.

You end up with an approximation, a best guess at how a group of people are cultivated. We have this phenomenon that's global, and it's ubiquitous, and it's called mainstream culture. And I think it's important to try to examine what are the ingredients that go into the pot known as mainstream culture. And I think what you'll find there is the contribution of all these otherized groups over time, have built up this huge asset that is commercialized and monetized around the world.

And so at some point, I think this conversation really evolves beyond the question of diversity and gets into another part of the popular acronym DEI. And that really goes to this question of equity. If I wanted to sell my home, one of the things that I would first look at is, okay, well, how much equity, how much stakeholder interest have I accrued in that asset over time?

And I think the question here that we should be looking at is what stakeholder interests do the otherized communities of America hold in mainstream culture? What is mainstream culture but for the contributions of these communities? And how do we identify and recognize and acknowledge and perhaps even compensate for that contribution? And so, as I said earlier, I really don't want to be redundant. I think what was said by Congressman Castro and Dr. Ramon was spot on. I would like to tell this anecdotal story.

However, Frederick Douglass made a very deliberate and intentional decision to become the most photographed person during the 19th century. He did that because at that time, media, of course, was reflected in print, and the depiction of African Americans in print was made to be grotesque. It was made to be inhuman. And so he purposefully sat for portraits that would demonstrate his integrity, and, by extension, the integrity of his people.

That's a very brilliant thing for him to understand at that time, given the status of what media meant. Fast forward to 1915, when D. W. Griffith released what is essentially the very first epic feature film of our industry, Birth of a nation. The technical expertise in the making of that film is a marvel. It literally is a tour De force in terms of its cinematic accomplishment. The storytelling, however, sucks.

It is the story of the reconstruction era in the south and the freedom of previously enslaved people and how their assimilation into society created all kinds of havoc for the dominant culture. And the NAACP made a very valiant effort, in fact, to have that film banned from cinemas. But we were unsuccessful in that particular campaign. In fact, the then President Woodrow Wilson made the brilliant choice to make it the first film ever screened inside the White House.

What we did see immediately following the release was a precipitous climb in the membership of the Ku Klux Klan, and surprisingly, not just in southern states, but all throughout the Midwest. We also saw a direct spike in the number of lynchings, because the imagery embedded in that film was more than just a dog whistle. It was a call to arms. It was also an extension of the prevalent thinking of the dominant culture at that time.

And that's what Hollywood's role has been to propagandize a particular point of view that is prevailing. So this conversation about diversity really is a question of whose point of view should prevail. Is there room enough in this industry for an amalgamation of points of view?

And as I said earlier, given, as you heard the statistics from Dr. Ramon, given the level of consumption of communities of color, of Hollywood content, you would think at this point that we should be having a more intelligent conversation about our equitable interest in the outcomes that the industry generates.

Thank you, Mr. Bowser. That was really important to hear. I did not know, the fact that President Wilson had screened a birth of a nation at the White House, and that was the first film that was screened there, I think it's very telling of the historical impact that films have and our societal understanding of what we see, how we interpret community, how we interpret people, and what's accepted and what's not. I think that's incredibly talented, just incredibly important to know. I did not know that.

So thank you for sharing that. Based on the conversation that you have heard today, any advice that you might be able to give the members of this Committee and the work that we're trying to do through the California Film Tax Credit program, on how we in California can change the narrative, on how we create equity across the board.

I think the conversation between diversity, to your point, and equitable measures of success are important and would love to hear maybe some guidance that you may have based on the conversations that you've been having as well.

Well, thank you for that question. I think somehow we need to get back to what is universally tends to be more of a mathematical approach toward the question of equity. The NAACP is one Member of a large coalition of advocacy groups. We call ourselves the Reimagined Coalition.

There are multiple African American facing organizations involved, as well as Latinx and Hispanic organizations, as well as Asian Americans, as well as Native Americans, as well as the LGBTQ community, as well as the disabled community and the Islamic community is involved. We are a very diverse coalition of groups, all facing the Hollywood community in conversations about these issues. And we recently issued a questionnaire to more than 60 DEI executives across the industry. We asked them to do something very, very simple.

Please define for us diversity, define equity. Define inclusion, and define accessibility. Most of the responses we received were concerned about why we're asking the question, what our intentions were with the answers. Now, mind you, the folks that we sent this questionnaire to, most of them had DEI in their job titles. But for some reason, we're reluctant to answer the question of how do you define those four words? But those that we did receive responses from, and we're about to publish this in the very near future.

By the way, when it came to the question of equity, instead of the universal definition that we all know from being homeowners or car owners or whatever it is, whatever hard assets we may have invested in, instead of those kinds of definitions, they use warm and cuddly words like impartiality, fair treatment, and equal access to opportunity. Those are wonderful virtues, but I don't know how to cash that at the bank.

And so I think we need to be a little bit more honest about what our equitable interests are and how we are going to define them, how we're going to calculate them, and then how we're going to recognize them in the way in which we operate our business. And this is true whether we're talking about Hollywood or plumbing or car racing or whatever the industry might be, the contributions that have been made to what is now referred to as mainstream culture need to be acknowledged.

Thank you for that. Are there comments or questions from Members of the Committee? Good. Mr. Chen

I was going to back to Dr. Ramon. Dr. Ramon, if you could, you mentioned that there hasn't been much progress made. Can you give us a sense of what you think of what are the barriers to greater progress? I mean, obviously, you heard from our Committee. I don't know if you've been listening to the testimonies from the legislatures, but the legislators are frustrated, especially given that we're in our debating our fourth iteration of a tax credit.

So I think California has done its part by coming through with its tax credit, and the industry seems to not have done their part by having greater inclusion. So just wanted to get your thoughts on where you see the barriers or the challenges.

Yeah, that's a great question. I think that what I was mentioning earlier in terms of the stats about in front of the camera, I think it's really interesting to see that Hollywood does just enough to show that they're making an effort. Right. But it's such a minimal effort in a lot of ways. And so that's not to say that studios haven't produced films that have people of color as the lead or in the director's chair or who are the main screenwriter.

But basically what you've seen then through the years is them just doing minimal effort because it at least makes them appear that they're trying to diversify, but they're not giving up any power in that way. Right. And so I think it's an issue of them not having to be forced to make any change. For years. For decades, actually, they were protected by lobbyists in terms of being held accountable by the Federal Government. Right.

In terms of their equality, in terms of who was hired throughout the studios. And so because they were able to hide behind this idea that you can't regulate art, then they were able to get away with this culture where they had not been questioned up until just probably the past decade, where people started to make demands that they do diversify more. And so I think that's the issue, is that for years they've just had this excuse.

And so they've created a culture where the industry just feels that this is the status quo, this is the norm, to have white men be in charge from the highest positions of power and that they will be the decision makers, the ones that greenlight. And so that's difficult for them, I think, to create that change unless it is demanded of them.

And so at this point, that's where I do think that the government does play a role in requiring them to show that they are making concerted efforts. Because right now it's just kind of a superficial change, right. That we see. And there's not enough people of color that are the leads. I mentioned total film roles, but leads are still not at a proportional. They're not proportionally represented in these top theatrical releases. The past two reports, we've also talked about budgets.

And this next report, I think that'll be really eye opening because that's where you kind of see the underpinnings. I think in some ways you can call it a form of discrimination that is against all women and against people of color, that they tend to have the lowest budgets. So when they finally get the opportunity to make a film, they are then saddled with these low budgets, and then they have to compete against other films by white male directors that have tremendous budgets. Right.

That's an unequal playing field to get viewers to get excited about your film. Right. If you start off with such a Low, that's just where I think it's been difficult.

Yeah. So, Dr. Ramon, what I heard you say is unless we force them or demand them to do it, you don't think anything will change.

Yeah, I think because from what I see is that it's been just such a slow, incremental progress. Right. So that we see that there's these percentages that increase, but it's never at the rate that it should be. We've been studying this since 2011, and then you think, oh wow, there's like this trajectory that's going. That's really increasing. And the data that I mentioned, it did look like that there was substantial progress being made.

But in the report that will come out with next week, we can see now it's like a two tier system that's being created in theatrical releases versus streaming releases. And so how is that going to play out? And what will be interesting to see is the current year, what happens when the industry will be closer to 100% the way it was before the pandemic. I definitely think that in order to see a significant jump is that they will have to be required in some way.

Thank you. Mr. Bowser, are you still there? Same question. What do you think needs to be done to break down some of the barriers that you talked about?

Thanks for the question. I really think that it's important that those of us who are sincerely interested in examining this question are willing to go to the core of it. Ultimately, although we're having a conversation about a tax incentive, this is really a public health issue. When you understand the power of the media and how media shapes hearts and minds and is spread globally and it shapes or it reinforces or affirms for some identity, then you look at behaviors in our society.

We then understand the relationship between media and public health. And so I know everyone is not taxed with that responsibility or that role. And that may not be all of our lanes to travel, but at the end of the day, that's really what we're talking about. We're talking about a power that is so awesome that it can literally shift the world on its access by the use of imagery and messaging. That's public health.

Thank you very much. Appreciate it.

Assembly Member Mckinnor, did you have a comment question?

Yeah, I would just like to make a final comment. Madam Chair, I have to leave.

Yes, please.

I thank you guys for coming and speaking with us. I thank you for your leadership, Madam Chair. And Mr. Chairman, I also thank you for your leadership to hear today. My family worked for the TV. My mom worked in TV. My dad worked in the film industry in the 70s, 80, and 90s. Guess they retired in the early 2000s. There were very few people that looked like us there. And so from the 70s to 2023 I would have thought things would have changed, but it really didn't.

I would tell you that in the 90s, though, the television industry really, really did a jump on hiring African American, having African American shows. And when they did that, that brought out everybody. Camera people, hairstylist, makeup, just a whole bunch of folks. And so that's the kind of stuff I'd like to see done across races so that we can truly represent California.

Because, again, what really bothers me is when we talk about these jobs, we went on a tour of the studios, and they really, really talked about jobs. They hammered on jobs that improve their family. This job did really do well for my family. That's how my brother and I were able to go to college and do the things that we did. I would like to see more people on those studios.

The tour just blew me away because we saw nobody that looks like me at one of the studios. And it was disheartening. And so as they talked about the jobs, it really did hurt my heart to hear these folks talk about the jobs they talked about. It's a family industry, and that their family was being hired. And so as a Legislator that has African Americans, Latino, API, Indian folks in my district, I would do them a disservice to approve this tax credit without asking about them.

Right. And so as they talked about those jobs, I thought to myself, why would I care if it's just to one group of people? Well, I care about California. I was born and raised here, and I don't want to see motion picture go to other places. I wanted to stay here. But I'm really, really asking you guys today to dig deep and really work on your diversity plan. Thank you.

Thank you. Assemblymember, before we go back to panel one, I do have just one additional question to Dr. Ramon, and that she's still on. She's still on. Okay. Very, very interesting report. And I'm curious as to the methodology used to gather the information. I'm curious, how do you create the UCLA Hollywood diversity report? How do you get the data to create the report while we are facing challenges within the California Film Commission when we don't have data.

So what makes your report different, and what resources do you have that would potentially be utilized and replicated by our California film Commission, in particular to the California film tax credit that would allow for us to be able to also have data? That's a great question. Thank you.

I want to also explain that we are looking at the key positions that are in front of and behind the camera. So we don't look at below the line, which are obviously still very important. But the reason that we don't look at below the line jobs is that because that data is not publicly accessible and that it is held mostly by the unions. And so it would be wonderful to also examine that data, but we don't have access to it.

And so the reason why we were able to do this study is that there are a few resources that we use. And so we rely, first of all on credits. And so then through the credits, then we examine those key positions. So we look at the main cast roles of those actors that are the top eight that are listed in the credits. Right. And then we look at, obviously, the lead from there.

And then for television, we look at the show creator, because a showrunner, which most people hear about, I think, in the media, they are not accredited. They're just usually an Executive producer. They have another title that's credited. So the only way to get a reliable data on that is to ask the production itself. And so because we're dealing with just a large amount of shows that we examine, we can't contact each production.

What we do is we look at show creators for television, and then we look at episodic directors and credited writers, also for television series, for film. We look at the credited screenplay, the screenwriter, and then we also look at the directors as well. And so that data we are able to get through grace notes studio system that is now owned by Nielsen. And then we also are able to cross check that against IMDb.com.

And then there's this other database that is owned by Variety, which is owned by the Penske Corporation. And so the well known trade magazine variety, it used to be called Variety Insight. Now it's called Luminate film and TV. And so with those three main sources, then we are able to find out the race, ethnicity and gender of people that are working in those key roles.

And so it's important as social scientists, that we use multiple sources, and we do not rely on one source, because since we've been doing this data. We know that oftentimes there's errors in each of those data sets. So we use our own research and we use those three primary sources in order to gather that information. And not until just a few months ago did two of those sources start publicizing or publishing disability data.

And so in our upcoming film report, we will have disability status for the actors because that is data that is now being collected, and it's only if the actors have self reported that they have a disability. And so that will be included in our upcoming report. We will also see if we can include LGBTQ status, which is also something that has been starting to be recently collected. So again, for some of those identities, those have to be self report.

But the original information that we were able to gather since the 2011 film year and 2011-12 TV season has been race, ethnicity, and gender. Because of those databases, they have been collecting that data for that long. And that was mostly used, though, for the industry to really, I think, for casting. And probably the past five years, it has increased in terms of the collection and the amount of data that they have collected.

So that's why we've been using our own Internet research, our own research, and then using those sources for the data that we've collected since 2011.

Thank you for that, Dr. Ramon. I think that just really illustrates how difficult and challenging it could be to gather information on equity, diversity, inclusion from the industry in General, just like it is with many other industries. I could imagine having to cross reference information, having to account for percentages of errors, and ultimately providing a report that is as inclusive and as thoughtful as it can possibly be takes time and it takes effort. Thank you for that. We're going to conclude with our panel on diversity.

Thank you very much, Dr. Ramon and Mr. Bowser, for your time. And I share that comment. To say, like, this is challenging. It is difficult, right. It's not something that can be easily gathered, but it needs to be thoughtful and it needs to be intentional. And so to that point, we're going to come back to panel one related to the California film tax credit. I want to congratulate the Commission, the California Film Commission, for the selection of everything everywhere, all at once.

I think that's such a beautiful film and clearly a recognition of what is possible. Right. And like I said earlier, Everything, Everywhere, All at Once feels a lot like the Legislature, and it is an independent production. And so I wanted to kind of get back to the questions on refundability, but also, I'm also very curious to know more about transferability and how that works within the California Film Commission.

And is there an opportunity, has there been any thought around the program participation tax credits that is currently allowed for independent studios? How does that play out with the refundability question and everything that we discussed earlier today? I think that's more directed to the Department of Finance, if you can help us understand that.

So just thank you for the question. This is Jacob Kirn again. Do you want just a rundown of structurally? How it.

Yes. Yeah.

Okay. So for transferability, currently, independent films are able to sell their tax credits. So an independent film is categorized as any film whose budget is below $10 million. Right now, transferability is not an option for any productions that aren't categorized as independent films. So it's only those small organizations, or small productions, rather, that are able to transfer their credits. You'd mentioned refundability.

So this is just a proposal at this point, but our refundability proposal, this would be available to all productions regardless of whether they were an independent film or not. The current proposal is to essentially allow them to receive a refund worth one fifth of their total credit award each year. Minus 10% so 18% of their credit award each year for five years, at which point their credit would be exhausted, and that would be, again, available for all films, regardless of whether or not they're independent films.

But if an independent film were to sell their credit, which they're still able to do, then the purchaser of that credit would not be able to refund the credit.

And are there comparable costs? Like, what are we talking about here?

Yeah, so we estimate that the cost of refundability will be about 200 million over the course of the next 15 years. Because of the long schedule that the program allocation and then certification and then subsequent claiming takes place over, the costs are very diffuse over a great many years, 15 for refundability. But about 200 million would be the difference between.

We've based that estimate off the fact that in the past, some productions that received credits would not end up using their credits, we think likely because they had insufficient tax liability to use those credits. So, basically, our estimation of refundability cost is those credits that would be certified or would have been certified, but we don't think that the production would have had the tax liability to actually use that credit before it expired.

So 200 million for the next 15 years in cost, that's about 13 million a year. Right. I did pull out my calculator, too, wondering if the LAO has done a similar cost analysis.

Yeah, I mean, I think. We think that the administration's estimate is reasonable on the 200 million. There's a lot of moving piece, I shouldn't say moving pieces. There's a lot of assumptions that have to be made that we can't really be very sure about. But we think that the 200 $1.0 million number is reasonable.

It seems just trying to understand the cost of business and wanting to keep this industry here, wanting to ensure that the program is successful. Is that an appropriate, you think, use of funds in terms of just the cost alone being about 13 million a year when we're trying to increase production and we're trying to increase jobs? Just trying to understand. And that can go for both the Department of Finance as well as for the LAO.

So I would refer back to what Ms. Bell's opening remarks, in which the California Film Commission has looked at some of their program data from the last iterations of the Program 1, 2 and 3, and found that the state, without the credit, lost 77% of production spending by projects that applied for the credit and did not receive it. So we believe that it is worth it based on the gains to the state that come from those productions locating within the state.

And I don't know if the CFC wants to.

I mean, I think the only thing that I would add know, as I mentioned in my opening comments, there is a little bit of evidence from the research that the refundable credits are particularly attractive to the larger production companies. And that is national research. Unclear how much that would necessarily apply in this case. But if that did lead to larger budget productions, more of them locating here, that might further the goals of kind of expanding this industry in California.

That being said, I think that to your point, $200 million, could you get a similar benefit by simply adding an additional 200 million into the existing non refundable credit program? Maybe. I think that's definitely a possibility and could be considered if the only consideration is how much are we kind of growing the size of this industry. I think, you know, there are additional considerations with refundability.

The Department of Finance mentioned that there are maybe a number of production companies that may not even be interested in the credit because they don't have enough tax liability. And so again, there is a consideration of just kind of fair treatment of the different taxpayers in this industry, but also potentially creating additional competition among the production companies who are applying for the credit that can potentially be a double edged sword.

It creates more pressure for more credits, but if you have more competition, putting additional goals in the ways of diversity and other things, that may be less of an issue. If you have more people competing. Some of them don't want to do those things. Then it goes to the other folks who are willing to put forth that effort. So a lot of considerations there, but just. Yeah.

Thank you, Mr. Lee.

Thank you, Madam Chair. I wanted to make some comments because unfortunately, I thought I was going to be able to stay for all of the panels, but unfortunately, I have to go to another obligation. But I wanted to just clarify. I think I heard that everything everywhere was a recipient of the California tax credit, is that correct? Even though it was a small production or independent production. Okay, well, that's good to hear.

I mean, certainly as an Asian American, it matters a lot, and especially LGBTQ American. Asian American, it matters a lot. And those things are important. But I want to concur some of my thoughts with Chairman Ting. Both of us representing Northern California and also for us representing the tech sector, we have a different diversity problem altogether. We have a different flight situation altogether where they threaten to leave a lot of time.

I'm not saying that the motion picture industry is necessarily threatening the same thing, but we don't give tech industry money in the same way. When we also ask for socially desirable outcomes as well, to having a more diverse workforce and more diverse people in front of the camera, it's really important. And especially speaking as an LGBT Californian and Asian American, we want to see more people who are working these today jobs and on the camera as well.

And speaking as Asian American, we also want to see more than the same five people, Asian Americans we see every time on camera. So it's really important to make sure we're having those metrics in front of us. So I do hope that you'll come back to us with metrics, with numbers and showing us that if indeed your plans are working out to show us that they're working out.

And if they're not, we have to have frank conversation on why it's not working out, because we want to have more people involved in this industry. And also in an alternate universe I shared with some folks today when they're lobbying me about this, is that I almost went to film school. I thought, along with many of my friends, thought we were going to become part of the entertainment industry.

So I know firsthand that there's no shortage of people who are vested in this art and this craft that want to be involved in, especially from communities of color or queer communities.

I don't think any of us have made it, quote unquote, yet in the industry, but they're trying still, I still have friends that are trying, but it's important that we give those people opportunities, and especially even people outside of Los Angeles in the heart, like in San Jose, where there's creatives out there, they need to have those chances and opportunities to be given.

So, and I've never met any single person in the industry, whether they are above or below line, that doesn't do it for the love of the art, but they deserve to also have fair compensation, safe working environments, and to be treated fairly, just like our global partners when they are working in art projects there, too.

So it's very important that we see that data, because what I am hearing from industry is they're asking for us for money with new requirements of refundability and this kind of stuff that is new to us. But we also want to see assurances and stability that we're also meeting these goals, desirable goals that I think we all share. We want to make sure that Californians of all backgrounds are sharing in this bounty.

So I thank the chair for letting me make these comments, and thank you so much.

Thank you, Assembly Member. Before we move on to our final panel, I want to thank everybody that's in the Committee room who is being patient, and I know we still have a couple more things to go through. One final question. Comment for the California Film Commission.

Earlier, you spoke about how important it was for the studio or production company to submit their work plans, and that each individual, it was up to the folks that were putting forward the work plan to come up with what would be their measurements. Right? Did I understand that correctly?

Yes. In California, we are restricted by Prop 209 in the sense that we can't ask for quotas. So it is up to each project to tell us what their goals are, but based upon our regulations, which ask very specific questions toward those goals.

So that's part of my question that I was going to bring forward to you, is how can we create uniformity throughout the application process? So, given that there are some concerns related to Prop 209 and quotas, we all understand that, but there is a very active effort within the Legislature to be creative about how we think about potential incentives or potential opportunities for more disenfranchised communities or communities of interest to be able to have access.

So my question to you is, what does it look like so that one, studio, studio one, studio two, studio three, follow a similar process of uniformity when doing the application, when providing information that can be replicated across the board so that you're not getting different things from different people and then trying to make decisions. What does that look like?

Well, each of their work plans would be different and how they will go about achieving those desired results, who they're going to be working with in terms of hiring, which training programs they'll be working with. There's so many different ones. So each project's work plan will look very different, although the uniformity will come in with them having to answer the questions that are set out that they need to adhere to in putting their work plan together.

The question asked by my colleague earlier, Assembly Member Mckinnor, was about a good faith effort, right. There's a difference between a good faith effort and then actually having the information, both for when you start the application process and then towards the end of a production. Right. So you may lose some folks in between. You may need to hire different individuals. Life happens. Right. So at the end of a production, how can we guarantee that what was initially approved continues to be the final product?

And so I've been thinking about how other states may be doing this work and what can we apply here to ensure that this program is successful.

I'm not aware of any other state that requires workforce diversity plan, particularly in the beginning stages of an application process. So this is something very unique. I'm not sure that there is anything comparable at this point.

Well, I think New York and Illinois both require diversity work plans, but there's no incentive attached to it, which is an interesting thing to think about. Do we really need a monetary incentive for this to work? It seems to be working in both of those states where they are getting diversity work plans. They're not getting additional tax credits for it. And as far as I know, they're complying, and I'm happy to dig deeper into that.

I don't know much about their specific work plans because I'm not privy to them, but I know that is part of what they require. And just since I have the mic, I wasn't clear that you wanted to get into very specific diversity statistics in this meeting, but since you did mention that you did, I do have the statistics for the 15 projects in the 3.0, their diversity information, which I can pass out.

And we will send the diversity statistics from our progress report from 2.0 to each of you, as well as the diversity statistics for our career readiness interns because we do collect diversity information from people who are hired on those shows. So we will send them to all the Committee Members.

Thank you for that. I think that's very important to a lot of the Members, as you have heard today, curious, the additional data on the reports and statistics that you have, correct me if I'm wrong, based on what you shared earlier, is only on volunteered information, correct?

Yes. According. Nobody can be forced to give their ethnicity, but on the 15 projects that we did get for 3.0, I believe 85% did self identify their ethnicity and gender, which is pretty good.

That's great. That's a great number. We want to get to 100%, clearly, but that is a really great question because we just never know. Right. The data that you're providing, is it 20%? Is it 50%? Knowing that it's at 85% volunteer information gives us, I think, a better understanding as to the workforce and what that could potentially look like. Does the Film Commission currently work with organizations, nonprofit organizations, that do the work in creating a workforce?

And this is a question that I may want to ask later to our stakeholders panel as well. In terms of what do the apprenticeship programs currently look like, what is the growth of apprenticeship programs currently look like? What are the components of your partners within the Commission that you work with? You can give me a broad understanding of that.

I'd be happy to send you our latest report from our career pathways program, which describes our training providers as well as some of the statistics I mentioned earlier.

Okay, well, thank you. I look forward to seeing that. But I think it'd be great to also, if you can share right now, publicly.

Well, we use in terms of who are our training providers? We work with manifest works. Manifest Works works with people whose lives have been impacted by homelessness and incarceration. And they have a terrific program with a lot of social supports and a lot of these people who really were pretty. I met this one particular woman at a graduation recently. She was African American. She had been homeless. She has a child. She really was desperate. She got into this program at Manifest Works that we help finance.

She was able to train to become a production assistant. And from there she got into our program that has to deal with apprenticeships for the Sound Union. And now she is a Member of the Sound Union making union wages, and she now has health care for her and her child. So there's a lot of great stories like that from manifest works. We also work with Hollywood CPR, which is affiliated with West LA Community College. And we train people in below the line craft positions.

And we also work with the Handy foundation, which focuses on post production jobs. And it is run by a gentleman who is Afro American. And they target people from underrepresented communities, like all of our training providers. And again, we can give you whatever data that we have. I do want to say that the film Commission does not have a statistician on our staff. We don't really have anyone who's trained in that. So we do the best we can with the data that we can get.

And I also just wanted to add.

That we also at the film Commission just launched a new accounting program recognizing there is a need for entertainment production accountants. We have launched our own program and course and had a graduation recently of 30 graduates and put together a job fair for them. And some have had interviews and have landed jobs through this program. And we have another course coming up in May.

Thank you for that. I think that's also very important to understand just the variety of different workforce that goes into it. Just for the Hollywood CPR report, I'm glad that it's working out in West LA. We welcome them in East Los Angeles and we welcome them in south LA as well. We'll just start off with those two community colleges as additional potential opportunities.

But as you saw clearly from the Members that were with us in the earlier panels from different parts of California and Southern California specifically, there's a great desire and great need. And so I think as we think about how do we increase opportunities, your partners within the film Commission are also important, both on the labor side in terms of crews, but also in the nonprofit training sector that allows an opportunity for an entry. Right.

So looking at those numbers, I think will be important as we think about the longevity of this program and opportunities in which we can create a pathway that is thinking about the diversity workforce but also in a way that allows for us to do that despite the challenges within Prop 209. So if it's partners. Right.

Much like the Georgia Film Academy, which has partners in the State of Georgia that allow for an opportunity, an entryway, a pathway, apprenticeship programs where then production and studios can select from. Do we currently have that in a way that's robust and how can we grow that? I think it's a potential opportunity that we get to think about long term. Well, I want to thank you all.

You felt like you were in the hot seat, so thank you for staying with us and for answering the members'questions and providing that data. I'd love to have, Ms. Stone, that data that you have. Thank you. And we can begin with our final stakeholder thank you, our stakeholder panel. And again, thank you to the Department of Finance and the LAO as well. We will begin with our stakeholder panel. If you can come to the desk, please.

And one of the panelists, Ms. Jeanette Volturno and Marseille Brown with Catch Life Studios, will be on Webex. So we'll have them go towards the end. And while it may seem that Members have left the building, they have not. I've gotten several texts of folks watching, this is a must-see TV for the Legislature. And so let's begin this panel.

Ms. Hi, Madam Chair and staff, my name is Kathy Banuelos. I'm Senior Vice President for Government Affairs from the Motion Picture Association. And I truly appreciate the opportunity to be here today and provide some testimony in support of the Governor's proposal. I think, you know, we've heard quite a bit about diversity today, and I just wanted to personally affirm that our studios are fully committed to the mission of diversity and inclusion.

And I don't want to get into data as much as just maybe take a step back and take us back to the original objective of the film tax credit program and the evolution that it's gone through. It was enacted initially in 2009 and significantly improved in 2014, really as a way to stop the bleeding of jobs.

At that point, the LAO even reported that California was losing significant jobs to other jurisdictions, and our entire market share, frankly, had dropped to about 50%, and that was, again, 2014. I think if you revisited that numbers and you took into account the amount of productions that have gone abroad, given that Canada and the UK are actually the most competitive jurisdictions to California, it's not so much to their states, it's also foreign countries.

I bet that number and that market share and the total production pie that California has, has decreased even more. So I think the question here and the policy objective of the Legislature was to make sure that California was retaining and capturing back a lot of those job losses. And I think that we've demonstrated through study after study, the LAADC just published a study last year that has really cemented the success. We have recaptured a lot of jobs. They've relocated.

I think the industry stabilized following the enactment and certainly after the program was significantly improved in 2014. And every time it's come up for an extension, we have gathered as a stakeholder community to figure out how do we keep building and how do we keep improving to make sure that this industry is strong in California. So I think that brings us to where we're here, which is having a really robust conversation about diversity.

I think the fact that we had this conversation is a measure of fact. It's a success story at this point, like the fact that we actually get to roll up our sleeves and talk about how we're going to do more and be more aggressive on DNI.

Below the line and above the line is a sign that I think it's a recognition by the stakeholders that more has to be done and that we can do it in policy and we could also do it on the private sector. Our studios have been doing quite a bit of work and I think, again, collectively we're willing to be a resource.

And the diversity work plan component of 4.0 presents an opportunity not only to maybe be better in terms of data collection, of reporting, of making sure that we're telling not only the story, but actually just establish maybe a baseline that can be measured year after year. Because I think what we started off a little bit is just the trouble even of how do you collect data, how do you know where to start, and how you're measuring success.

So I think, again, on behalf of the studios, I just wanted to say that we're fully committed to that mission. We want to be part of these conversations. And we would obviously work with the Film Commission in developing program guidelines and regulations to make sure that those work plans are meaningful and they're moving the personally, I mean, I was born and raised in East LA. My entire family is dispersed throughout LA County, San Bernadino County.

I mean, those are my folks that I think when we talk about diversity and making sure that this industry works for everyone, it's the people that I grew up with. So it's personally important to me. And professionally, obviously, I'm invested in it as well.

So, I mean, I'm happy to answer any questions on the program mechanics or any other data points, but really, at this point, I just wanted to say we're at an inflection point where we can really gather as a community of stakeholders and roll up our sleeves and see how we're going to make a difference.

Thank you for that, Ms. Banuelos. I'm going to ask the panelists if you could introduce yourself for folks that are watching as well. Let's continue.

Hello. My name is Alex Aguilar. I am the Business Manager for Liuna, Labor's Local 724. Okay, well, thank you, Assemblymember Carillo, for the invitation to speak to the Committee today. The California Film and Television Tax Credit program is a lifeline for the working women and men of the entertainment industry. We greatly appreciate Governor Newsom for including an extension of the program to 2030 in the 2023-24 budget.

You are likely aware of the program's facts and figures, which are important, but my remarks will say what the union members of this industry want you to hear. My name again is Alex Aguilar. I am the business manager for Liuna Local 724. One other thing that I'd like to share is that I'm the first person of color to be elected as a principal officer for the labor's local in the entertainment industry in the 90-year history of our local.

We are the voice for 1750 utility workers in the motion picture industry. Our building, maintaining, and breaking down of sets while not seen by the public is an integral part of creating films and television shows. Today I am also representing the Entertainment Union coalition whose members are the California Aahazi Council, the Directors Guild of America, SAG-AFTRA, Teamsters Local 399, and my local. Together we represent over 155,000 women and men who work on motion pictures and television shows.

While it may appear glamorous from the outside, the day-to-day work in this industry is not. It is very hard work. That is not for everyone because it is a freelance industry, which means that for most, every job could be their last or is their last. Luckily, we are one of the most heavily unionized industries in this country and the unions and guilds ensure that they have good paying middle-class jobs with benefits for members and their families.

One of the efforts the union have taken most seriously in recent years is making our industry accessible to a new, more diverse generation of workers such as myself. The current incentive program has a program called Career Pathways for training Californians from undeserved communities for careers, not just temporary jobs in the skilled craft occupations which all the unions and guilds represent. Even with the pandemic shutdowns, the program still managed to have 224 graduates and the number is expected to double this year.

72% of the graduates self-identify, with historically underrepresented communities. And already 29% of those members are members of unions with the same wages and benefits as the current union members in those locals. But all our efforts to open the industry are predicated on there being actual production jobs here in California.

And I will say this, while we've made a lot of progress in diversity, I will say that there is definitely a lot of work to be done still and we are working towards that goal for all of us on behalf of all the unions and even the studios. The world thinks of California as the home of the motion picture industry. But in fact we are a highly mobile industry. We have much to be proud of here in California.

The tax credit program is the most transparent and accountable of any state incentive program in the country. The job creation at spurs has enabled a union like mine to grow from 765 members to well over 1700 members. All the California-based locals have also added hundreds of Members thanks to this tax incentive program. Your review of this program and your support of it could not come at a more important time. States and countries continue to lure production away from California.

This year, the Governor of New York proposed to raise the New York state credit from 420 million to 700 million a year. New York is strong competition because of its hub for talent and crew. New Mexico is also doubling its incentive. Texas is also talking about taking production away from California. And just a few days ago, the UK generously increased the value of its credit. We can't allow other jurisdictions to cannibalize an industry that we built.

Our members need your help in our fight to keep the work here. And if I may add a couple things that I won't be reading, I want to second Ms. Banuelo's comments that I'm an immigrant. I was actually born in Mexico. And when my father came to this country, he was fortunate enough to be able to join this union. The union. I wouldn't be sitting here, sitting here today, you know I'm still like, wow, I can't believe I'm testifying in front of all you guys, right?

I too come from that underrepresented areas and neighborhoods. And so while we've made progress, like I said, I see it throughout the industry, the unions, the guilds, we're all working diligently to try to change the workforce in the entertainment industry. And like I said, if you walk through the stages today, I'm not sure which show they visited, but I can tell you from me, who is highly and very heavily invested in this diversity as well. It's changing and we're making progress.

We have a long way to go, but it's changing. And I will stop there. Thank you.

Thank you.

Thank you, Assemblymember Carillo and for offering me the opportunity to appear before the Committee today. For our Members, the other craftspeople we work with daily on set, and all of the related businesses which serve our community, the California Film and Television Tax Credit program is a lifeline. We are grateful that Governor Newsom included an extension of this program in his proposed budget. My name is Brigitta Romanov, the Executive Director of the Costume Designers Guild, IATSC Local 892.

I'm a Board Member of the California IATSC Council and its recording secretary. I'm also here today on behalf of the 54,000 members of the CIC. Local 892 represents 1200 professional costume designers, assistant costume designers, and illustrators who work in film, television, commercial, and other media. Our members practice the craft of telling a visual story through the use of clothes. I'm sure that when many of you think of a fantastic and beloved character you saw on screen, what they are wearing is also etched in your memory.

The Costume Designers Guild prides itself on the diversity of our membership. We are among the most diverse local and the next generation coming up is even more multicultural. Our member, Ruth E. Carter, is the first black woman to win two Academy awards. Our Members are also so grateful that because of the incentive program, they've been able to live and work in California. Many of our members have children and have to go out of state to work on a film or series.

Production puts parents in a very difficult position. If there is no work in California, you either leave your family, which I have done multiple times for extended period of time, or give up the work you love. Having the option to work and be with your family is an extremely important to our members. Parents should not be forced to leave their families in order to provide for them. The California Film and Television Tax Credit program is a proven job creator and economic driver for the California economy.

The men, women, and kin which make up the entertainment industry, unions, and guilds wholeheartedly support the renewal of the extension as proposed in Governor Newsom's budget. The 40 program, in addition to providing thousands of union members work, will elevate many issues critical to us, while also ensuring that some significant employers in our industry now have access to the program. There is something in this budget proposal that works for everyone and most importantly, works for the economy of the State of California.

The values of this program should never be in doubt. Proof of that is the drumbeat of the elected officials in the states Alex mentioned, who just since the beginning of 2023, have openly expressed their desire to take production from California and make it theirs. Our members are seeing this and they are very worried. We are starting to see the impact.

IATSC members reported hours for their pension and health contributions to the motion picture industry pension and health plan are down 11% in 2023 over 2022, while New York is up 9.38% during the same period. We look to you to ensure our members can work in California. Now is the time to reinvest in the film tax credit to make certain the entertainment industry continues to flourish in this state.

Thank you very much for your testimony. I do want to ask both Mr. Aguilar. Oh, I'm sorry. Thank you for the reminder. Yes. One more panelist for the stakeholder panel. Let's go to Webex for Catchlight Studios.

Hello.

Hello.

Hi. We are so excited to be here. Thank you so much for having us. I'm Marcy Brown and next to me is Jeanette Volturno. We are producers who own an independent production company in Los Angeles, Catchlight Studios, and creators of a DEIA for accessibility database called Crewvie. As producers, we work with all the major studios, streamers, foreign sales companies, banks, and bond companies. First, we want to express our appreciation for keeping a tax incentive in California and for carving out a piece for the independents.

Independents are the pathways for opportunities for people entering into the industry, getting into the unions, finding new voices and training the next generation. If we don't support the independents, people will leave for greener pastures and California will not have the next generation living in the state, creating and supporting our economy and unions. A bonus percentage for the independents would prove balanced hiring and best effort practices in DEIA would encourage people to opt into those hiring practices.

However, an independent can't be penalized for missing the mark if they show best efforts because they rely on banking and bond companies, which would not close if there was a chance of 4% being a shortfall in the cash flow.

We have spent our careers helping to teach and advance careers on the projects we work on and the companies we run. We needed to create a database that would help us find people by how they self-identify, if they spoke another language, where they lived, if they were union or nonunion, what their experience was, et cetera, and to show our accountability in who we are interviewing and who we ultimately hired. That's why we created Crewvie.

We built it from the ground up by an all-female and diverse team. In 2020, we were chosen by the EIF, the Entertainment Industry Foundation, to be the database for the pathway programs in our state. The EIF received a grant from the Irvine Foundation to help find and recruit people for the studios from all walks of life to pursue careers on the corporate side and on the set.

Our platform allows everyone who wants to work in the entertainment industry to join for free and self-identify how they want to be seen. Through the EIF, we are involved with nonprofits like Hollywood CPR, Evolve, Manifest Works 1 and 4, and through our contacts we're working with large agencies like Endeavor, Fifth Season, and studios and independentsto promote productions in being accountable in their hiring practices from the beginning and to show the actual analytics at the end of a production.

We are the only platform in the world that can show how a production team in real-time analytics are hiring and if they will qualify for the Academy Awards, Oscar raise rules, or women in film reframe. And we can give the California Film Commission a portal to have this information on any production that is filmed in California and signs up through Crewvie. Imagine if every studio, union, agency, film commission, and school were all rowing in the same direction and had access to the same information.

We are not owned by a large company who does not share data. We do not collect social securities or birth dates like payroll companies, which makes it scary for people to put their information in on how they identify. And we do not show contact information that can be scraped from our database, thus protecting the individuals on it. Our platform is growing and the EIF is hiring more Crewvie concierges to help identify and fill positions for corporations and on projects.

Crewvie can provide a stamp in conjunction with the CFC for any project that has completed its DEIA mission. It would be a way to incentivize productions and a badge of honor. An end credit acknowledgement of the studio's DEIA efforts would be an incentive for projects and should be considered particularly for Independence. We can also track carbon footprints on set and provide the analytics for that, which would include an own sustainability stamp. And we'd be happy to set up a demo on Crewvie for anyone interested.

Thank you.

Thank you.

Thank you, ladies. Much appreciated. That's incredibly insightful. The carbon footprint stamp is a whole other panel and conversation worth having and really about the future and sustainability and how we do that work within the entertainment industry. And I know there's some folks already working on all of that as well.

Since we have you on through the Webex, Ms. Volturner and Ms. Brown, can you share a bit about the feedback that you've gotten from folks that have participated in your app that provide their information on how they identify? And is it challenging, is it not? What does that look like for you and how does that work with the studios that you're currently working with?

Sure. Because we are built from the ground up and we work with our partners. We're able to create various different categories for people. For instance, in the one in four group that we work with who work on people that have disabilities, we've been able to add languaging in there to not only do physical disabilities, but also mental disabilities. And that has been a game changer for people to be able to identify how they want to identify in multiple different categories.

So we work with LGBTQ plus categories, and we've been able to add other categories into there as they come up, as people want to identify in them. The same with any of the other diversity categories and also link them to things. Questions in there, have you ever experienced homelessness? Do you have a car? Can you get to set? Are you part of a food assistance program? Any of those type of questions we can ask in our database, it's not forward-facing.

It's something that we have in the back that we can provide the analytics to at a much higher level. And I would say on any production, depending on how the production really leans into telling their crew why they are using this, we have up to 80% adoption of self-identifying fully on the way that they fill out their analytics.

What's your relationship been like with some of your labor partners in terms of the data needed or the data that you're trying to capture?

We love working with our unions. They've been extremely supportive. We found that the unions don't have one particular database that they work from. They all work from their own databases. And so we're working with them to try and get it across the board connected together. And we're also working with contract services to connect to the back end of their database. And they've really leaned in on this so that as a producer, we wear two hats.

So as a producer, as we're looking to hire somebody in the State of California, we have to make sure that they've done all of their safety training. And you don't want to go to multiple different databases.

I don't want to go to one database that I can look somebody up to see if they're available, and then another database to see if they've gone through a particular program and if they hit all the diversity requirements, and then another database to see that they've done all of their safety programs this way on our database, those programs are connected together. And you as a producer, can look up and see.

Can I look at people that have gone through the manifest works program or the Hollywood CPR program, or a union-sponsored program, and can I look and see if they've done their safety programs through contract services, and can I show that this is who I'm hiring for these positions and have the accountability of, I have looked at X amount of people that have identified in different categories, and I've hired this person so I can show you who I've looked at to interview and who I've actually hired.

And as producers, we want to have everyone on the same page and get some sort of uniformity about people reporting the statistics. So then we can all be apples to apples.

And one final question on just data. If you have a quick overview from the 80% that you've been able to get to self-identify, do you have any just top grass overview as to what that percentage looks like, how many women, how many people of color, what ethnicity, et cetera?

Yes. So the majority of people that identify on our database seem to be under the age of 35. They tend to be more on the female side of things and they tend to have some diversity towards them. The landing page on our site has all of the analytics that you'll see in there. It is a global database. We do have about 20,000 people in the State of California and we can pull all of those analytics. It's union, nonunion, it's heat maps.

It shows you where they are based from all different things.

That's very interesting. Thank you for that. Thank you for your presentation. Thank you. Please stay on in case there are any additional questions before we wrap up, I'm going to turn to the panel. I'm going to go to you, Ms. Banuelos, first. Refundability was a big part of the conversation today. Can you speak on that issue and the importance to the.

I mean, I mentioned earlier that every time we're looking at how to improve this program, we're looking at also how to make sure that California is maintaining a competitive edge. And I think you heard earlier from finance in their own research what we already know, which is almost every other jurisdiction, domestic and global, offers an option to either transfer or refund the credit.

And for our member companies, it is frankly, the tool that's necessary to make sure that the program in California remains accessible to all of our studios. It is, I think, a way also to ensure that you are capturing and attracting those bigger budget productions that will then command a larger tax incentive award because their budgets are larger, which is, frankly, the productions that the state's losing on the most.

Since it's a capped program, it really just increases the applicant pool and the competitiveness so that when the applicants are ranked according to the jobs ratio, the Film Commission will do as it does now and selects the ones that are creating the most jobs. So right now, if you're a larger production, the program has not been amended to allow for a refundable tax credit.

You're likely going to take that production to another jurisdiction that does have that option, and the state's not even had a chance to assess what kind of job creation would be possible if it stayed here in California. So from our perspective, it's just, again putting California on par with, I think I would say, at least 100 other jurisdictions and making sure that there's at least a chance for those bigger tentpole productions and also bigger budget scripted TV series to make sure they keep applying.

What are the challenges as to why refundability now versus in the past, what's changed?

I think it's just a matter of the studios and the productions that apply are increasingly just finding that they're earning more tax credits than they have tax liability. And so it's just a matter of being able to fully utilize and get back the incentive that you budgeted for on the front end. And that hasn't always been the case, but that is the case now.

And when we compare the California Film Tax Credit program, Television and Film Tax Credit program in California versus other states that have been mentioned throughout the hearing, New York, New Mexico, Georgia, what can the State of California be doing different, not only to incentivize production here, but really to be competitive when other states may not be requiring what we require.

Requiring what we require, meaning,

I'm sorry, like there's, there's challenges within the State of California, right. That other states may not face. And so how can we get through those hurdles while we try to stay competitive?

Well, I think you have a proposal in front of you that will get you there and move the needle. I would say, obviously grow the program would be one, because the $330,000,000 was allocated back in 2014. And when you're looking at the total size of production industry globally growing the program, obviously we would advocate for that. That's not what's in the proposal, which is why we think the tweaks and the refundability is what's necessary to make sure that you're capturing those larger productions.

I mean, it would put us on par. I think we heard earlier New York is increasing their tax credit again, frankly, other countries are just as competitive as other states.

Thank you for that. I think given the conversation earlier on a lack of data information from the productions already approved within the program, it's challenging to tell the Legislature or ask the Legislature to potentially increase the program while we don't have data.

Understood.

That's a challenge, even though my own personal belief is that if we can find a pathway, and I believe that we can, in creating a workforce that is reflective of the people of California, while we create opportunities for more production, more jobs, increase opportunities across the state. It seems that California can and should be more competitive. Right. We want the industry to stay here. We want these jobs to be here.

But at the same time, we also need to show the Legislature the data that certain things are working. And so I think that's a question and a challenge that we all face in that effort. And so with that vein, I also do want to ask you a bit about what the Motion Picture Association is doing to.

Promote diversity. We've heard from, obviously, our labor partners and the various different challenges that have been talked about throughout the hearing, the UCLA Hollywood Diversity report being one of them, the national conversation, and so wondering if you can share some viewpoints on that.

Yeah, if I can also just go back to your prior question and then I'll come back to the second one, is I also just neglected to kind of talk about the soundstage program, too, because that's, frankly where the diversity work plan requirement originated, and that was enacted in 2021. And just going back to the pilot careers training program that we've heard statistics on, that Fund was started in 2020 right at the cusp of, frankly, in the middle of the pandemic.

So I think we just want to recognize that we've had some challenges as an industry that no one had any control over and actually had led to an unprecedented stoppage of production. So just to kind of again establish a timeline of why we may also not have the best data, given that these programs are relatively new and we had a disruption in the meantime that has prevented what would otherwise have been more robust implementation.

And the soundstage program was just enacted in 2021 because I would say I would be missing a big component of infrastructure. The development of infrastructure is something else that California needs in order to maintain a competitive edge. So it's obviously accruing the tax credits. It's a big factor in where you locate your productions and also infrastructure and having facilities. So going back to the stage program, the iteration of the diversity work plans came from there.

It's relatively new, it's in its infancy, and we haven't yet had the opportunity to fully look at the diversity work plan in action. Right.

So now that kind of brings us to where we're at now. And what kind of parameters do we put around a diversity work plan requirement in 4.0 such that we're all able to maybe get on the same page on the data collection and reporting and really be able to tell a better narrative? On the MPA side, all of our Member companies have dedicated diversity and inclusion departments, and they've been rolling out trainee programs on their productions for below the line jobs.

They offer writers clinics, they offer programs for emerging directors, also for actors. So they all are operating and not only again focusing on, I would say, in front of the camera and behind the camera, holistic wraparound, I think look at diversity inclusion, and it's also corporate wide, so they all publish DNI reports. Those are available online.

More than happy to come back to you with a more comprehensive package of their reports, because they do publish annual reports, not just on the individual programs that they're running on their productions, but what they're doing across the board, corporately. And the MPA itself, we have our own DNI partnerships and we partner with over 50 organizations nationwide in order to make sure that we're sort of acting as a connector and supporting programs that are attempting to open up career pathways and training opportunities.

I shared earlier in my opening remarks that it's been disheartening, right, to see that in the 98 years, it's taken 98 years to have an API Best supportive actress or best, I'm sorry, best actress at the Academy. And I'm so excited to know that it was a production, an independent production done through the California film tax credit. It just shows the immense opportunity that exists, and I'm really happy to hear about the MPA's commitment towards that.

I'm curious, in your conversations with studios and your representation of studios and their partnership with the California Film Commission, what does it truly look like to create more programming, more films that are more inclusive towards the people of our state? You heard the comments earlier from several Members who are obviously concerned with approving tax credits, while we are also not seeing ourselves reflected. And there's some conversations around that wondering if you can share what the commitment is. What does that look like?

I think it's being very deliberative. As individual companies, I want to be mindful of with the Prop 209 restrictions that were mentioned before. So with respect to specific commitments assigned to projects that are receiving a tax incentives, there are some limitations legally with what we actually can require there. I will say, though, again, that's why the studios have stepped up and created entire departments that are very taking a very deliberative look at content from the very beginning.

Frankly, even we have programs that are looking at script development and the content of the script itself, which will then inform what it looks like on screen. So I think it's a beginning to end deliberative process where you have to make an effort to engage, you have to make an effort to make sure that the storytelling and the people who are then creating the end product are reflective of the nation's diversity. And I can tell you that that is happening.

DNI is just absolutely top of mind to the point where I could tell you I came from a law firm before I started working in the government side, and then now in the private sector and at the law firm, I was the only person who spoke Spanish in my law office in downtown LA. And the conversations that are now happening around diversity and inclusion.

In my current capacity, in my interactions with the studios, the fact that we're having the conversations so frequently, the fact that there's a lot of passion and recognition that it's a problem that we need to make progress on, that was not there when I started out as a young attorney, night and day. And I could tell you even in the last decade, I have seen just an immense focus, like laser focus on this issue.

And I can tell you that sincerely, there is not, I would say, a day that goes by where there isn't some conversations happening around diversity and inclusion. And that's holistically, too. It includes a disability community, veterans reentry, people coming out of prison. All of our Member companies have some programming that are targeting these kinds of different constituencies, and a recognition that, frankly, at the end of the day, the content is better.

And as has been said before, it's good business to have diversity front and in front of the camera and behind.

Thank you for that. I'm going to turn over to Mr. Aguilar and Ms. Romanov. Can you share a bit about your apprenticeship programs? What does that look like for someone coming in? How does someone get in? What has been the growth and partnership within? Specifically, as we talk about the California Film and TV tax credit program?

I became the secretary of Treasury in 2011, and at that time we were looking at right under 800 Members once the 2.0 program kicked in in the later. Was it 2014? I believe is what Kathy said is when we started to see real growth. With that being said, what we have as an apprenticeship program, it's not the same as the laborers on the outside, on the construction industry, but we do have a program that we are trying to get off the ground.

In other words, we don't have an established apprenticeship in the industry. I think it's due because of the unique business that we represent. But I've been working with the studios to try and develop an apprenticeship that will open up more paths to underrepresented communities. Now what we've done, what I started to do, because diversity is a passion of mine. When I became a laborer in 1995, there wasn't many folks who looked like me on this stage. My father was a labor. I'm a second generation labor.

So when I became the principal officer of the local, I made it a point and a goal of mine to diversify the union. And I took that on as a task alone. I partnered up with communities in schools, homeboy industries, to try and reach out to folks so that we can give them an opportunity to join the entertainment industry, and it's worked out pretty well. Just recently, we had. And I can share this.

I don't think my cousin, my primo, will be mad, but he did some time, and he got out, and he called me one day and he said, hey, primo, I need a job. And I actually told him, listen, and this is exactly what I told him. When you can show me that you can stay out and actually spend time as a good citizen, then call me.

A year went by, and he called me a year to the date of that conversation, and he said, I'm still out. I have the same job. Can you help me out? We got him in the industry when our books opened up. He just recently bought a house. I don't know where else you can do something like that. He went from being in and out of prison his entire life to becoming a Union Member in the entertainment industry, and now he's a homeowner.

So those are the type of things, I know I'm kind of deviating a little bit from your original question, but those are the type of things that we've managed to do within our local to make sure that we open up for everyone to be able to join. And like I said, as far as the training, our apprenticeship, we have different contracts, and we have apprenticeship programs under a couple of agreements. Unfortunately, those agreements are not tied into the motion picture industry.

One is for the theme park, which is Universal Studios. Another one is for our billboard installers, Alpha Media. But when it comes to the actual motion picture industry, we do not currently have an apprenticeship program that we can say, hey, here you go. Let's go. So that's something we're working on.

So we are an open union. We don't have a roster. That means anyone can join us at any time. If you have one credit, nonunion, any kind of credit that shows you're a costume designer or an illustrator or an assistant costume designer, you can join our union. I think that's why we probably have a high diversity in our union. Also with us, when you get into our union, if you don't have connections, we're not a hiring hall. We can't find you jobs.

You have to have connections. So we've put forth plans for mentoring or interning or any of that. The problem is you have to go and make those connections where people can hire you. And the people who can hire us are other costume designers or producers, directors. Right. That's who hire my members. So when we talk to the studios, they need to allow our program to actually go and meet these other people and stay with them on a project for a month or two.

So it's been hard to try and get that kind of program someone for us. It wouldn't be a lot of times students want to mark the box that they've hired a diversity hire, but that's not what we want. We want a career. We want someone who can do it for the rest of their life. And that means they have to make connections.

And that takes a couple of years, minimum a year, so that you could have a month on this project or a month on that project and get to know the people who will hire you. So it's a little different with us. If you feel like you have those connections, you can join us at any time.

If I may add, a couple of things. So we have partnered up with a couple of the studios of the Member companies that Kathy represents, and we have what's called a skills training program. And so that has enabled us to bring in folks know different that I wanted to just point that out. There's a couple of things that we're trying to improve upon, but we do have a couple of Member companies that participate in this skills trainings program.

We bring folks in at a lower rate, and then they gradually work their way up to what we call journeyman rate. So they go through, it's a wage progression, as the more hours they work every 90 days, their wages go up. And that's part of that.

Thank you both for sharing the operations process of your unions. I think that's important. And there's so many, and I'm so grateful that I got an opportunity to meet with some of you through the entertainment union coalition and really understand the process of your work, the process of your union. And I think what I'm kind of hearing is that maybe we have certain expectations, right?

We, the Members of the Legislature, have a certain expectation of how we could potentially would want to see diversity and equity issues and measurements of success within the California film tax credit program work. And with that, we're also asking the studios to be able to create a pathway for productions that are reflective of the people of the state, both in the narrative behind and below the line and everything in between.

But what I'm also hearing you say is that there are potential challenges, maybe within your own locals, about a pathway opportunity entryway. Ms. Romanov, I heard you say you have to know someone to get in, right? You have to have a credit.

No, you can get into our local someone could hire you and you could get in. So we're a non rostered union when I say that to have a career, right, you need to have connections, and that could be. So lots of people come in. This is a great example. Lots of people come into our local who don't right out of school. Right. We do a lot of outreach to theater schools. Theater like, you know, East LA College. We do a lot you know to underserved communities.

And they will come in, but they aren't successful. They're in our union, but they can't find jobs because they don't have people who can hire them. Now, we have events, we do things where we can introduce them, but you have to have a multitude of people who can hire you, right?

Knowing one or two people, you may be on a job with one person who then decides to take time off, and the other person you know, has already crewed up, and they're hired all their people, so you have no one else in your box to maybe find that job. So it's not who you know, per se, it's how many people your social network is. And so one of the ways that you do that in a program, right.

So you could hire someone and you could put them on a job, and they could do very well on that job, but then they don't have the next job to go to because, like, they keep saying, this job could be your last job. Well, it's only your last job if you have no one else to hire you. So really, the important thing for a diverse hire, any hire, is their network. And that's what, for my local, that's what you have to establish is a network.

And that really comes from the studios allowing us with a program to put someone in who can shadow all these different designers so they make those connections.

Did you want to respond to that? No, I'm trying to envision it, right? I'm trying to think of, like, what does it look like to be a 17 year old student at Garfield High School in East Los Angeles who is in the theater program because they love it, right, but has no connections. No one that in their realm, in their family, in their network, has ever worked for a production, a studio, a theater, much less been in a union dedicated to the entertainment industry, right?

So maybe they meet you or someone on your team, and they are trying to figure out if this is even a career opportunity for them, a pathway. But if they don't have the confidence, the skills, the background, someone to guide them, it just seems it's very challenging, right? To bring someone from a disenfranchised community who's new to this industry to try to build that pathway, that pipeline. And I would say very similar to Mr. Aguilar, to your story about your cousin. Right. Your cousin knew you.

He can call you and you gave him a timeline. Like, show me that you're truly interested, and then we can try to see if we can work something out.

I bring that up only because I can see how challenging it is to actually bring in a diverse workforce within your locals, to then be available for hire, to then be available to be potentially put on a film tax credit program through the state that could potentially eventually down the pathline, fill out the form that says, tell us who you are. How do you self identify? It seems like the way to get here.

And what we're asking the Film Commission to do and what we're asking the MPA to do and what we're asking all of you to do is challenging to get here to this spot. And so I'm trying to think of ways for the longevity of this program. Right. And to know that I also have a very limited time within the Legislature.

I'm on my fifth year, and I hope to be able to create and be part of building something that is sustainable in the long term so that I can point to something later. And said, together we created something that has changed the face of California and has moved the needle forward as to what is possible. And hearing you all is like, there's challenges even within the workforce. And so I leave you with that thought in terms of what can we be doing better in partnership?

What does that look like within the California Film and TV tax credit program? What does that look like in partnership with the MPA and the studios that have the jobs? What does it look like to create narratives and stories that are reflective of people? And to the point of Congress Member Castro, who earlier in the hearing said, how do we ensure that through tax credit programs, we're not funding our own exclusion? And I think that's critical in the conversation.

Any thoughts on that before we close out?

I can offer some closing thoughts. As a high school drama student, didn't go to Garfield, but went to a very similar high school in a similar working class neighborhood, I didn't know the answer to the question you just posed as a 17 year old graduating. No one in my family, I mean, I will say no one I knew worked in the entertainment industry. So I ended up going to law school eventually. My career in acting ended right after high school. I think we can start.

I would just say, practically speaking, it's almost like you're asking, how do you eat an elephant? Right?

So we do it one bite at a time. And if we're looking at this has been helpful in sort of fleshing out maybe what we haven't been doing again through these various iterations of the program. I think first and foremost, it has to be ensuring that this program gets extended and that the industry isn't bleeding more jobs and losing more market share to other jurisdictions. If the jobs are here, then we can have a serious conversation about then who's filling those jobs.

And if we're looking at maybe the Film Commission and the challenges with data collection and that we have to rely largely on self reporting and we can again be more deliberate on what the mission is here, not only for the programs that are in the tax credits, but obviously what the studios are doing with these wraparound outreaches for above and below the line.

And I'm just thinking of, again, maybe there is a way to either get us all on the same page in terms of the kinds of data we're collecting, how we're sharing it, how we're compiling it into reports that are basically answering the questions that all the members here are posing. And if we're doing that prospectively, I think it really is, how do we seize the moment?

And a program like Hollywood CPR, and even Manifest Works, I mean, the high school student you talked about, that's the programs that are set up to service those constituencies you would look at, give them the soft skills first. You got to also, how do you interview for a job? This is how you show up to work. This is how you dress. And then there's the hard skills trainings that you would get through a program like skills training or Hollywood CPR. There's challenges.

And frankly, even knowing those programs exist. And so maybe that's another thing that we can look at, how we can be collectively better at that and how the Film Commission can take, we can work with the Film Commission to flesh out collectively how we're advertising those programs, who's learning about them, and then maybe how do we create scale? How do we create scale?

So that, to your point earlier, they're offered at different campuses or different locations, and they're in proximity to the kinds of communities that have historically been underrepresented. So I think it's frankly, an exciting conversation to have, and we can roll up our sleeves and I think we can move the needle. I feel like, again, this has been kicking the tires and seeing where some of the deficiencies have been, but it doesn't mean that those problems can't be remedied.

Thank you for that.

So I just want to say this. In our last bargaining with the AMPTP, we bargained DEI so there are programs in place. That's not true. There are programs that are going to be in place and we're working on it so that every local has a pipeline to get underserved Member or underserved communities, the ability to get into it and also get the connections that they need so that they can have a career. So that was bargained in our last, in 2021.

So that is one of the ways that we are working on it. It probably took us the longest to bargain. We took three weeks for that, which was, we really put a lot of effort and a lot of the locals behind me are already starting on their programs to make sure that we have something in place that the underserved communities have a way.

One of our concerns is that we really want to make not just be a checked box, but make sure that they have the connection so they have a career.

So I want to piggyback off what Brigitta just said regarding bargaining and what we did bargain and what we agreed to with the Member companies, with the AMPTP. And back to what you mentioned about being challenging. Some of us have what's called seniority within our international local union bylaws. Right. So it's hard from time to time because we have to put the folks to work that are on the out of work roster.

And that was something that we talked to the studios about when they brought up the talk about diversity and hiring just from underrepresented communities, people of color and so on and so on. And so that's something that we are continually trying to work on so that we can open up a pathway for folks to come into the industry. One thing that the laborers do a lot is we go out and we speak at schools.

I've been at Van Nuys High School, North Hollywood High School to talk about the opportunity to work in the industry. And I know it's not that easy to go out there and do something like that. But what I mean by that is that I think we can do more, definitely do more to figure out how to reach those folks.

Like I said, this is something that recently came up during the last bargaining cycle, which was during COVID or pre COVID, and then we hit COVID and then everything kind of froze. So it's been a challenge to really kickstart and just to give you a perspective of what we went through as far as the unions and the studios, we normally negotiate way in advance.

I just got a copy of the agreement we negotiated in 2021 and it's taken that long and it took us that long to bargain. So we're really trying to play catch up here. And I kind of wish that the members who were here earlier would have been able to hear some of this because it has been a challenge to try to get this far.

It seems like, and I'll say this collectively, we may not be doing it, but it's just we are so far behind due to COVID and the pandemic that we're trying to play catch up, but it is something that we are all trying to reach and get to.

Thank you for that. The beauty of musty TV, television and budget is that they're watching.

Well, good. I'm glad.

So shout out to the Members of this Committee and other Members who don't sit on budgets of four who are also watching, because this is a very important conversation to a lot of folks. We intentionally made this particular hearing, an informational hearing so that other Members that are not in budgets of four could join. And you heard from them earlier as those that are watching now. And so we're going to be wrapping up and going to public comment.

But let me just say, just as a note of personal privilege to the three of you, thank you for the work that you're doing to really promote and encourage and find opportunities to be able to bring folks from all kinds of walks of life into an incredible, amazing world class industry in which our stories, our narratives can be seen, can be told and ultimately inspire.

And I think that's what we're trying to accomplish and in particular within this program, how do we ensure that we're using public dollars in a responsible way given the challenges that we have, but also trying to figure out a pathway.

And what I'm walking away from here is that there is an incredible opportunity to do more and to be in the room where it happens, to try to figure out a way, throw spaghetti on the wall, see what sticks and really try to figure that out, I think is exciting.

And I'm really looking forward to a partnership, both within the unions as well as the MPA and specifically with the California Film Commission to ensure that we're not trying to say, like, we can't do something, but we are trying to make the impossible possible. We're looking for partners that are know, how can we get this done? How can we overcome? How can we figure out this challenge and really move forward for the people of California. And I think that's exciting.

And congratulations to you, Mr. Aguilar, also on being in the position that you are given. You are the first person of color to serve in your union and your leadership role and the massive growth that you've seen within your local because of this program. I think that's telling of what is possible.

And so I think this is one of the best hearings that I have been a part of and that we're walking away with a lot of information, and several Members have been texting that they're watching and have ideas. And so we're hopeful to be able to create and think of a program as we figure out in our budget process, what can we do as we deliberate. So again, thank you to all of you. Thank you to all of our panelists.

Panel one on the Governor's proposal and the California Film Tax Credit, as well as our diversity panel, learned a lot. And obviously to all of you, the stakeholders, thank you. We're going to go now to our public comments, and I have lost my papers. Too many papers.

Here we go. We will be accepting public comment at the end of this hearing. Well, now, both in the room and on the phone. The phone number to connect is on our Committee website, but I'll share it right now. It's 877-692-8957 the public access code is 131-5447 if you would like to submit public comment, let's begin with folks in the room, and you may leave the table. Yes, thank you. For those testifying, the public comment is 1 minute.

So both in the room and on the phone, please begin and introduce yourself.

My name is Scott Bernard. I am the business representative of Local 695. That is the sound union that Nancy had referenced earlier. And that success story is one of several. We have a very robust training program within our local apprenticeship program. It's in our contract in the studios, work with all major studios on that. We've have about 56 people in the program. It's been very successful. We have a full time staff person that we pay for to run the program.

So we will share that with you and look to partner with you and grow that program with other partners in the industry. Also, I'd like to mention that we're a 93 year old union and our current President is female. She's one of the leading broadcast engineers in the business and half of our Executive board are female. So our union is very progressive and our Members are excited and they help and mentor these underrepresented people in that training program. So thank you for your time.

Thank you.

Good afternoon, Madam Chair and all the absent Members. I'm Traci Stevens, representing Netflix, and we're just here in strong support of the tax credit. Thank you.

Good afternoon, Chair Carrillo. Erin Niemela, representing Sony Pictures. We are also in support of the film tax credit and in particular the element of refundability, which we believe makes the whole program better by increasing competition. Thank you.

Thank you. Chair Carrillo, thanks for taking the time today. My name is Alex Tonison. I'm the western region Director for IATSE Local 600, the International Cinematographers Guild. I'm speaking here on behalf of our 10,000 Members who are below the line crew, the directors of photography, camera operators, technicians, assistants, utilities, still photographers, and union publicists. Our union is committed to diversity, equity and inclusion. With the support of our National Executive Board Inclusion Committee, we've recently announced that we have hired a full time DEI coordinator.

We also have prioritized working with organizations like Manifest Works and Hollywood CPR. In fact, I personally have volunteered my time with Manifest Works, supporting their students and alumni. We also are working to remove barriers to employment. In 2021 we proposed and successfully negotiated language that allows work in our entry level digital utility job class to gain a member placement on the industry experience roster. This provides a real union career path in the camera department.

Remember, unions don't make the hiring decisions, but the labor movement is working to prepare our communities to do this work. I urge you to support this incentive to secure our members' livelihoods, and to secure our community's future in this important industry in California. Thank you.

Thank you.

Good afternoon, Madam Chair. My name is. And to all the other Members watching, my name is Dejon Ellis, Jr. I'm the business manager at IATSE Local 80. We represent grips, craft service, medics. We currently have a membership of 3800. I want to also mention that I'm on the Executive board of the International DEI Committee, which was reconstituted about a year and a half ago. The labor side is committed to doing this work. We are doing this work. It takes time.

As the person on the panel said, it's like the elephant, one bite at a time. But we're doing it and we're committed. But I also like to say if we lose these credits, if the industry starts leaving, there will be no industry to help diversify. So let's all remember that. But we're going to do the work and ready to partner with whoever wants to partner. Thank you.

Thank you.

Good evening. Chairwoman Pat Joyce, on behalf of NBC Universal, really appreciate the robust conversation today. First off, want to voice support for extending the production tax credit. Retaining productions and jobs in California is a huge priority. Also want to voice support for the governor's proposal that includes modifications to the soundstage program, modifications we think will improve the overall soundstage program. And hear you loud and clear on the diversity component.

Think we can find someplace to land and look forward to working with this Committee and studios and the unions and everyone to find a solution. Thank you.

Thank you. I didn't realize it was good evening already.

Thank you, Madam Chair. Trent Smith, on behalf of the Walt Disney Company, wanted to associate ourselves with the comments made by MPA in support of the governor's proposal. Thank you.

Thank you.

Thank you, Madam Chair. Ruy Laredo, on behalf of Warner Brothers discovery just wanted to show our support for the production tax credit with refundability. Thank you.

Thank you.

Thank you. Madam Chair, my name is Tobey Bays. I'm the business agent of Local 44. I represent nearly 7000 diverse craft Members and a growing diverse membership. I also like to point out that Hollywood CPR was founded by a local 44 Member. It is fully supported by Local 44 currently with a business rep dedicated to that institution. We have been working on diversity for a long time, and as I mentioned yesterday, I am seeing the change. I have sworn in over 600 Members.

I'm saying it's starting to reflect Los Angeles. And I'm proud to say that we're in full support of this tax. I hope to seek your support as well. Thank you.

Thank you.

Hi, Chairwoman, how are you? Ed Duffy, Teamster Local 399. In full support of the tax credits, the film tax credits. And I have to say that along with my colleagues here from all the unions and guilds, we are working, even though there's been a lot of conversation about that we aren't or that there isn't enough to show for it. We've been working extremely hard to get there, and I know that we all continue to work very hard.

And so these jobs and these in California are extremely important to all of us. And so I would ask that to be really considered as we move forward.

Thank you.

Good afternoon. Rebecca Rhine, Directors Guild of America. And we stand in support of the extension of the tax credit. We have a very robust diversity program that includes shadowing, that includes negotiated provisions and regular meetings with the studios and the employers to try and actually quantify the progress that's being made. So we stand for a diverse industry. We also stand for a safe industry. And we hope that those three California values are applied as we move forward with this extension of the tax incentive. Thank you.

Thank you.

Hello. My name is Chuck Parker. I'm the National Executive Director of the Art Directors Guild, Local 800 in Los Angeles. I want you to know that since 2016, our rate of diversity of all new Members in our local is in the 40% range. We are committed to that. And we have been implementing the agreement that we agreed to in the 2021 basic agreement and have brought in over two dozen people, and that's without a firm plan yet.

So I want to reiterate what my brother Dejon Ellis said. We will need the incentive to continue for us to continue this work that we're committed to. So thank you very much.

Thank you. If there are no other comments in the Committee room, we will go to the public phone line. Do we have any calls? Do we have any calls? Operator. Thank you.

If you're in support or opposition, you may press one and then zero again. That is one and then zero for support or opposition. We do have one. One moment.

Are they on mute?

They're coming. One moment. We're just giving them their line number, and that's going to be line 115. Your line is open.

Hi. Thank you. My name is Sam Wilkinson. I'm with GRACE & End Child Poverty, California. I'd like to thank you all for holding this hearing and stress our appreciation for the legacy and importance of the film industry in California.

We urge the Legislature Reserve new refundable tax credits for programs that have consistently been proven to reduce poverty and provide financial security to our lowest income Californians so that we can make the most effective use of the state's funds. Every Californian should be able to afford food, housing, health care, and the basic necessities of life. Until the state can meet this standard, the Legislature should direct its limited funds to families and individuals who need it most.

Our state's budget is a statement of our values and lays out our vision for California's future. We would love to work with you all to realize a future where Californians are free from poverty. Thank you.

Thank you. Any other callers?

We do have one more, and that comes from line 85. Your line is open.

Hi. Good afternoon. My name is Justin Adams. I'm a senior economist with the Los Angeles County Economic Development Corporation. LAEDC strongly supports the governor's proposal to extend the film and television tax credit, as well as the provisions to make the credits refundable and to add the diversity requirements. We think that the provisions are really aligned with our mission to reinvent our economy, to collaboratively advance growth and prosperity for all.

We've been concerned about runaway production since we released our first report on the subject back in 2005. And we know that film production is highly mobile and increasingly driven by cost. So we appreciate the program's ability to help California level the playing field when it comes to the efforts of other states and nations to lure away our productions. So thank you very much for the hearing, and thank you very much for your time.

Thank you. Any other callers.

Have no further callers in queue.

Thank you, operator. We are going to close out this meeting, but I would like to, again, just say thank you to all the participants, everyone who stayed, all the Members who attended and are watching. I think when we think about equity opportunity across the State of California, the jobs that are provided through this industry are incredible jobs that actually lift people out of poverty.

And so in saying that and in that sentiment, as we think about our budget values and what we do moving forward, we do still need data, we still need information. We still need partnerships, and we still need to figure out a way in which this incredible industry that provides incredible opportunities to our workforce is reflective of the people of this state, that we are providing equity across the board, and that we are creating programming and entertainment that is reflective of the stories of the people here.

And I think we all want to see that. And how we get there is the question at hand. We want to see this program be successful and grow. We want thought partners with the film Commission as well as the MPA and our labor partners to ensure that there is a pathway for a workforce. We can't say we want to increase and have more opportunity and more production and yet not have the workforce that is reflective of that.

So how we get there, I think, is a question that is on our mind. And I'm walking away from this informational hearing actually feeling inspired of what is possible in partnership with all of you, in an effort to create equity across the board, to create opportunity, and most importantly, allow for those opportunities to be able to go into marginalized communities that have often not been a part of this industry.

And how we get there, I think is exciting in some, something that we get to work on, on the long term. So again, thank you all for your participation. Thank you for your patience, and thank you to all the Members that were a part of our informational hearing today. This hearing is adjourned. Thank you.