California lawmakers are racing against an 31 August deadline to fix flaws in a newly signed law, SB 122, that caps state business and corporate tax credits above $5 million, threatening the state's film and TV incentive scheme. The issue matters because studios and independent producers fear it could effectively strip away roughly $750 million a year in industry incentives by 2030, deepening a production downturn that has already cost Los Angeles an estimated 50,000 film and TV jobs over the past four years.

A compromise deal was reportedly agreed on Thursday morning to exempt independent productions and some studio/streamer projects, but it collapsed hours later when legislative leadership told Assemblymember Rick Chavez Zbur's office they were pursuing a "different approach," reportedly after signals from Governor Gavin Newsom's team that they disliked the proposal. It remains unclear whether the new fix will take the form of a trailer bill, a policy carve-out, or something else, and Newsom's office declined to comment. Zbur, whose district covers Glendale to Santa Monica, says he remains optimistic a solution can be reached with the Governor, legislative leadership and the Senate before the session ends, even as the wider industry faces further pressure from a possible Paramount-Warner Bros Discovery merger and an ongoing antitrust dispute involving California's Attorney General.