California lawmakers warned Newsom that the budget could derail Hollywood’s job push

California lawmakers warn that the tax credit limit in the last budget of Gov. Gavin Newsom may derail the state’s campaign to keep Hollywood jobs in the state.

In a July 10 letter obtained by FOX Business, 39 California legislators urged Newsom and other lawmakers to scrap the state’s Film & Television Jobs Program — aimed at keeping productions in the Golden State — from the top. They warned that the change could “severely overturn” the program, which was extended last year.

“We understand that the budget agreement is in place, but this problem must be resolved before the end of this phase,” the lawmakers wrote.

The warning came shortly after Newsom approved his final state budget as California governor, a $351.7 billion spending plan that tightens limits on business tax credits.

NEWSOM’S OFFICE INTERESTS ANTHROPIC ‘PARTNERSHIP’, 50% DISCOUNT ON CLAUDE AI FOR CALIFORNIA ORGANIZATIONS, LOCATIONS

The budget extends the current temporary portion of the $5 million California business tax credit for three years, through 2029. Starting in 2030, companies will be limited to claiming $5 million or 70% of their state income tax credit in a given year – whichever is greater.

Critics say the cap could hurt California film and TV, leaving studios unable to take full advantage of the credits they’ve earned by filming in the state. Lawmakers said the move would amount to “reinventing the rules.”

“As a result, many manufacturing companies will lose the full amount of tax credits they received in exchange for creating middle class entertainment industry jobs with health care and dignified retirement and other economic benefits the industry brings to the state,” the letter said.

Lawmakers also noted that California’s revised film program kept 133 productions in the state from August 2025 to April 2026, generating $5.5 billion in economic value, 38,050 jobs for actors and 247,934 days of work for behind-the-scenes actors.

NEWSOM’S POLITICAL DEFENSE FACES QUESTIONS AS DOJ INVESTIGATION CONTINUES

The budget extends California’s current $5 million corporate tax credit cap for three years, through 2029. (David Swanson/AFP via Getty Images)

“For 100 years, California has been the home of film and television production. That is in the past. What the Legislature does to fix the problem created in SB 122 determines whether that remains true in the future,” the letter said.

Southern California’s film and TV industry has struggled to recover from the pandemic, with 2023 Hollywood strikes and productions leaving other states and overseas, the Los Angeles Times reported.

Assemblyman Rick Chavez Zbur, D-Los Angeles, told the Los Angeles Times that lawmakers believe the footage was filmed outside.

“I don’t think anyone understood what this cap was, what it did, and that we are on our knees and reversing the progress we made last year,” Zbur told the media. “People need to understand that these changes, which I think people believed were minor, are significant and will lead to significant job losses if we don’t fix them.”

PARRAMOUNT COUNSELORS PUSH CALIFORNIA TO EXCEED AS STATE SEEKS TO BLOCK WARNER BROS DISCOVERY MERGER: REPORT

State Assemblyman Rick Chavez Zbur told the Los Angeles Times that lawmakers believe the film was filmed outside. (Matt Winkelmeyer/Getty Images)

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Newsom spokeswoman Marissa Saldivar told the Los Angeles Times that the tax credit limit is part of a “comprehensive fiscal proposal” to keep the state “invested” while maintaining long-term stability.

“We remain confident in the strength of the newly expanded Film and Television Tax Credit Program and will continue to work with industry and legislative partners to ensure the program is competitive,” said Saldivar.

Newsom and Zbur could not immediately be reached by FOX Business for comment.