California is making a new play to reclaim a part of the entertainment business that has increasingly migrated elsewhere: post-production.

Gov. Gavin Newsom has signed AB 2319, creating California’s first standalone tax incentive specifically for post-production work, including picture editing, sound, music, visual effects and finishing.

The initial program is small — just $10 million — but the significance of the legislation is much larger.

For the first time, a movie or television series does not have to shoot in California to qualify for a California incentive on its post-production work.

That means a project could theoretically shoot in Georgia, New York, Canada, the U.K. or elsewhere and still bring its editing, sound, music, VFX and finishing back to California and qualify for a credit.

The new program offers a credit of 35% to 50% on qualified California post-production expenses and is scheduled to take effect Jan. 1.

“This is a big victory in our fight to save California’s entertainment industry, and we’re just getting started,” said Assemblyman Nick Schultz, D-Burbank, who authored the legislation.

California Separates Post From Production

California already offers post-production benefits through its much larger Film and Television Tax Credit Program, which was expanded last year from $330 million to $750 million annually.

But there is a major catch: To qualify under that program, at least 75% of a project’s principal photography days or 75% of its production budget must generally be in California.

AB 2319 changes the equation by separating post-production from where a project was actually filmed.

That distinction could become increasingly important as California competes against jurisdictions that have spent years building incentives specifically around post-production, visual effects and other highly mobile work.

Countries including the U.K., Canada, Australia and Spain offer standalone incentives for post-production, while U.S. competitors including New York, New Mexico and New Jersey have programs that can attract the work.

For California, the concern is not simply losing where a production shoots. It is losing the ecosystem of jobs that continues long after principal photography wraps.

According to Schultz’s office, California’s post-production industry employs approximately 12,000 people, but the state has lost 1,874 post-production jobs over the past two decades.

Scott George, national executive director of the Motion Picture Editors Guild, called Newsom’s signing a “historic day,” saying the new program will help ensure that “even projects shooting outside of our state can come back to California to employ Editors Guild members in post-production.”

From $100 Million to $10 Million

The program is considerably smaller than what its supporters originally envisioned.

Schultz initially proposed a $100 million annual incentive. During negotiations in Sacramento, discussions moved toward a roughly $35 million first-year program before lawmakers ultimately settled on $10 million.

That makes AB 2319 a relatively modest program compared with California’s $750 million production incentive.

But supporters view the legislation as establishing something potentially more important: a standalone framework that could be expanded in the future.

The legislation was also amended during the process to address labor concerns surrounding visual effects, where much of the workforce is not unionized. Under the final structure, 85% of funding is tied to jobs meeting union-level wage and benefit standards.

The bill passed with broad legislative support before Newsom signed it at the Television Academy in North Hollywood.

Another Change to California’s Incentive

Newsom also signed SB 186, addressing another concern that had emerged around California’s expanded production incentive.

The legislation exempts qualifying independent films from the state’s $5 million corporate tax-credit limitation, accelerates the period over which refundable film tax credits can be monetized from five years to two years, and extends the expiration period for older non-refundable credits from nine years to 15 years.

Those changes arrive a little more than a year after California more than doubled its main Film and Television Tax Credit Program from $330 million to $750 million annually.

The Newsom administration says 170 projects awarded incentives during the first year of the expanded program are expected to generate $6.6 billion in California production spending and nearly 35,000 cast and crew jobs.

The Bigger Battle Over Post

For the global production community, AB 2319 represents another example of how the incentive competition is becoming increasingly specialized.

Jurisdictions are no longer competing solely for where cameras roll.

They are competing for individual pieces of the production pipeline — visual effects, animation, editing, sound, scoring and other work that can increasingly move independently of principal photography.

California still possesses one of the world’s deepest concentrations of post-production talent, facilities and technology companies. But having that infrastructure does not guarantee the work stays there when competing jurisdictions can offer significant financial incentives.

Newsom framed the new legislation as part of California’s broader effort to protect that ecosystem.

“California is the nation’s entertainment capital. It is the home of storytellers, dreamers, artists, entrepreneurs, and creators who define culture for the rest of the world,” Newsom said. “This legislation protects the extraordinary people who make this industry possible and makes it unmistakably clear: California is still the future of film and television. We have the talent. We have the infrastructure. We have the creative community. And we have an ecosystem that simply cannot be replicated anywhere else.”

For California, $10 million alone is unlikely to reverse decades of globalization in post-production.

But the state has now established something it previously did not have: a mechanism for competing for post work independently of where a project shoots.

And that could ultimately prove more consequential than the relatively small size of the program in its first year.