INITIATIVE UPDATE:
Hollywood Producers Join Attack on Proposition 13

Several high-profile Hollywood figures have joined an effort to attack Proposition 13 by imposing a new statewide tax on property valued at $3 million or more.

Kathleen McGrath, an executive at Bad Robot Productions, which recently co-produced “Star Wars: The Force Awakens,” donated $50,000 to the campaign for the property tax initiative. Frank Marshall, Rob Reiner and Haim Saban each donated $25,000 to help proponents of the initiative qualify the measure for the November ballot.

Mr. Marshall is best known for producing “Raiders of the Lost Ark,” “Back to the Future,” “The Bourne Identity,” and the sequels to those films;Mr. Reiner is known as a director of “When Harry Met Sally …” and many other films, and for his role as Michael “Meathead” Stivic in the 1970s television show “All in the Family”; and Mr. Saban is the producer of “Mighty Morphin Power Rangers” and is the billionaire chairman of the Spanish-language television network Univision.

The initiative, filed by former State Board of Equalization Member Conway Collis and others, would impose a new property tax on business and residential properties at rates ranging from 0.3 percent to 0.8 percent, depending on the value of the property. Tax-exempt properties and rental properties valued at $2 million per rental unit or less would be exempt from the new tax. While most of the revenue from the new tax would be earmarked for low-income communities and welfare programs, none of the new revenue would be used to finance education, as the supporters chose to bypass California’s minimum school funding requirement.

The new property tax – on top of the existing property tax – could roughly double the property tax burden for affected properties, costing taxpayers approximately $6 billion to $7 billion per year, according to an estimate from the Legislative Analyst’s Office.

The tax would hit many businesses associated with California’s film industry, and many homes owned by Hollywood movers and shakers. The additional tax burden likely would dramatically increase the cost of filming in California, and could exacerbate the problem of “film flight.”

Keeping the entertainment industry in California has been a top priority for Los Angeles Mayor Eric Garcetti, who said in a January 19 news release that his effort – dubbed “Greenlight Hollywood” – is “delivering results for the heart and soul of the film and television industry – the people who swing hammers, run cable and serve food on set so they can pay the bills and contribute to our local economy.” Mayor Garcetti said the “film and television industry is the lifeblood of Los Angeles’ middle class,” and that the state’s film tax credit and his administration’s efforts to cut costs and red tape have brought some productions back to California. Observers noted that a large property tax increase would negate the positive impact of the film tax credit and the other changes.

The initiative’s supporters have raised more than $1.2 million to pay signature-gatherers and cover the costs of placing the initiative on the ballot. To qualify their measure, supporters must collect signatures from at least 585,407 registered voters by March 21. Proponents say they have half the needed signatures, and observers believe they will secure the other half before the March deadline, and will qualify the initiative for the November ballot.

Major funding for the initiative has come from the Daughters of Charity, an organization of Catholic nuns serving the low-income communities. Joseph Sandberg, a wealthy Wall Street investor, also was an early financial backer of the proposal.

January 29, 2016

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