California’s latest budget maneuver—raiding future obligations to bankroll Hollywood tax breaks—shows just how far Sacramento will go to keep the lights on for Tinseltown, while public retirees and taxpayers are told to wait their turn.
At a Glance
- California expands its film and TV tax credits to an unprecedented $750 million per year, aiming to revive a struggling industry.
- The state budget includes a two-year deferral on nearly $85 billion in unfunded retiree medical liabilities, increasing long-term debt.
- Governor Newsom and Hollywood unions cheer the move, while fiscal watchdogs and taxpayer advocates call it a reckless, short-sighted stunt.
- Public sector retirees face growing uncertainty over their promised benefits as California prioritizes industry bailouts over basic obligations.
Hollywood Gets a Blank Check, Retirees Get an IOU
Governor Gavin Newsom’s grand solution to California’s gaping $12 billion deficit is to shovel more taxpayer dollars into the bottomless pit of Hollywood subsidies. With a flourish, the ink dried on a bill boosting annual film tax credits from $330 million to a jaw-dropping $750 million—an all-time high. The goal? Stop the bleeding as productions flee the state for greener, cheaper pastures. Newsom, flanked by union bosses and LA’s mayor, declared this the bold action needed to keep entertainment jobs local, even as the state’s once-mighty film sector limps along after pandemic shutdowns, strikes, and wildfires.
Funny thing about “bold action” in Sacramento: it tends to leave taxpayers and retirees holding the bag. While Hollywood studios and their lobbyists pop champagne, California’s public sector retirees got a different kind of gift—a two-year deferral on payments toward their medical benefits. The state’s unfunded retiree medical liability is already pushing $85 billion, and now those debts will pile up interest while the state fiddles with industry handouts. The budget “balances” on paper, but only by kicking the can (and the bill) down the road. It’s a masterclass in government priorities—throw money at the loudest lobby while telling everyone else to wait and see.
Bipartisan Backslapping or Bipartisan Blunders?
Supporters claim the new tax credits are a lifeline for a battered industry. Hollywood unions and big studios argue this is the only way to keep productions—and jobs—in California, instead of watching them stampede to Georgia or Canada. The legislature, always eager to look busy, passed the expansion with broad support. Newsom called the industry “on life support” and insisted that if the state didn’t act, it might never recover. Apparently, the only thing more sacred than the California Dream is making sure the dream comes with a tax rebate.
But here’s the kicker: even the state’s own Legislative Analyst’s Office admits that many productions would likely film in California anyway, with or without the massive subsidy. Critics, including Assembly Republicans and taxpayer watchdogs, have blasted the move as tone-deaf in a deficit year. They argue that prioritizing Hollywood over hospitals, schools, or honoring promises to retirees is a slap in the face to everyone who doesn’t benefit from red carpet events. Deferring debt payments now only guarantees taxpayers will owe even more later, as interest piles up and liabilities balloon. As usual, it’s the ordinary citizens—those who played by the rules and served their communities—who get squeezed when politicians play favorites.
Debt Kicking and Budget Tricks: California’s Latest Magic Act
Deferring payments on retiree medical benefits isn’t just bad optics—it’s bad math. Every dollar the state withholds now will cost more tomorrow, thanks to compounding interest. California has played this game before, patching over budget holes with IOUs and rosy projections. But this year’s move is the biggest yet, and watchdog groups warn it sets a dangerous precedent. If Hollywood can be bailed out with a stroke of the governor’s pen, what’s to stop every other special interest from demanding their own carve-out the next time Sacramento cries poor?
The state’s long-term fiscal health is now shackled to a short-term PR win. Retirees, who spent decades serving the state, face growing uncertainty about the benefits they were promised. Taxpayers, already battered by inflation and rising living costs, are told to trust that “something bold” will fix everything down the line. Meanwhile, the entertainment industry enjoys the fruits of its lobbying, with politicians eager for photo ops and campaign checks. If you’re waiting for Sacramento to put ordinary Californians ahead of Hollywood, don’t hold your breath.
