Art may or may not always imitate life, but occasionally a politician will turn to the fine arts to make a partisan point. Or so it would seem, after California governor Gavin Newsom placed this full-page ad in Variety calling on Hollywood to keep its business in the decidedly woke Golden State.
Newsom’s “elevator pitch,” as they say in show biz: “California is a freedom state: Freedom to tell your stories. Freedom to access the health services you need, including abortion care. Freedom to love who you love and to ensure that your LGBTQ friends, family and colleagues can proudly be who they are. Freedom from repressive state governments that want to tell you what to believe and threaten you with felonies if you don't toe their line.”
(You’ll note the governor didn’t say “walk the line,” which also happens to the title of the movie that earned the actress Reese Witherspoon an Oscar—Witherspoon’s Hello Sunshine production company having a business partnership with Newsom’s wife, a film documentarian, which we’ll get to in a moment).
As with Newsom’s past salvoes against the likes of Florida and Texas for their red-state sensibilities, one could argue that this latest targeting of Georgia and Oklahoma and their ambitious film industries (here’s what’s underway in the Peach State at the moment) is more of the same.
Even if it does risk collateral damage—such as a potential rift with Sylvester Stallone, who has a streaming series currently in production in Tulsa. Moreover, could California’s governor attend Ben Affleck and Jennifer Lopez’s expected second wedding in Georgia (Affleck owns a coastal spread in the Peach State), much less play a round of golf at Augusta (though Newsom’s insisted that he loves the sport, he might want to hit the links more often so as to look presidential)?
Time will tell if this and the rest of Newsom’s woke sermonizing will yield any fruit for California. But it’s worth nothing two things.
First, put yourself in the shoes of Stacey Abrams, the Georgia Democrat who’s trying to unseat Governor Brian Kemp. Abrams walks a fine line (there’s that phrase again) in an already contentious race. She warns voters that an “extremist agenda” might re-route businesses to Democratic states, but does Newsom’s targeting of Georgia potentially backfire by raising the question of how Abrams’s politics differ from Newsom’s? (Though Georgia presently has two Democratic senators and preferred Joe Biden in 2020, it’s a fragile existence, as all three Democratic winners won their respective races by 2% or less.)
Second, there’s the question of whether what’s best for Hollywood is also good for California taxpayers. Which takes us to the matter of the governor’s favoritism toward Tinseltown.
Newsom’s promised to sign SB 485, which would extend California’s annual $330 million in tax incentives to qualified film and television productions. That tax-credit program wasn’t set to expire until 2025. Then again, Hollywood studios donated generously to Newsom’s cause in last September’s recall election.
Hollywood also enjoys a very personal tie to California’s governor—namely his wife’s ventures in filmdom. Jennifer Siebel Newsom, California’s “first partner,” was once an actress who’s since segued to documentaries. How are her films financed? Through a nonprofit she founded called the Representation Project (Mrs. Newsom pulls down a $290,000 annual salary as head of the nonprofit). And who finances the project? According to a Sacramento Bee investigation of the nonprofit’s tax returns, companies that also lobby the Newsom administration—AT&T, Comcast, Kaiser Permanente, and PG&E (Newsom accused PG&E of “corporate greed” for its role in California’s wildfires while the utility was donating over $350,000 to his wife’s nonprofit).
To her credit, California’s first partner has cultivated friendships in the upper ranks of Hollywood—for example, the aforementioned Reese Witherspoon, who’s blossomed into a multimedia magnate. Witherspoon is a Tennessee native, and the Volunteer State also has been on the receiving end of Newsom’s scorn and ridicule. Could she be helpful in luring Tennessee businesses back to California?
Then again, California’s governor already has plenty of IOU’s in Hollywood. In addition to the anticipated extension of the tax-credit program, Newsom last summer signed SB 144, giving California’s film and television industries an added $330 million in tax credits—just one of the many giveaways courtesy of last year’s record budget surplus.
But here, California is playing a game it likely can’t win. As far as the entertainment industry is concerned, other states offer more far more attractive tax incentives than the Golden State (Louisiana offers a 40% tax credit vs. California’s 25%; Georgia has no annual cap on film and tax credits).
And there’s the question of whether Newsom and the state legislature’s Hollywood generosity is sound policy.
Three years ago, California’s Legislative Analyst’s Office produced this update on the Golden State’s tax credit program. Its verdict: “While the credit probably caused some film and television projects to be made here, many other similar projects also were made here without receiving any financial incentive.“
Something else the nonpartisan LAO discovered: Hollywood tax credits have proven to be a bad return on investment—for every $1 in film tax credit, the state receives only 65 cents in tax revenue, which is at odds with claims by the Los Angeles County Economic Development Corp. that the tax credits yield a positive return.
Such skepticism dovetails with this University of Southern California study, also produced in 2019, that looked at motion picture incentive programs in Connecticut, Georgia, Louisiana, Massachusetts, and New York. Its finding: despite nearly $10 billion offered over the course of nearly two decades, the largesse showed “no statistically significant effects” on employment.” (The good news: some states already have seen the light, with over a dozen having eliminated their film-production subsidies over the past 15 years, according to the National Conference of State Legislators.)
Will any of that data discourage Newsom from signing the bill extending the tax breaks for Hollywood?
Of course not—not when the industry in question sees the world through the same woke lens as California’s governor and isn’t shy about helping Newsom finance his political endeavors (which is especially important should the governor pivot to a presidential run in 2023).
Still, how refreshing it would be if, rather than singing a chorus of “Hooray for Hollywood,” Newsom put the tax credits on hiatus.
