Arnold Schwarzenegger gives California tax incentives.

Gov. Arnold Schwarzenegger (R-Calif.) announced Monday that "Beverly Hills Chihuahua 2" and "Naked Gun 4" are among the first 25 movie and television programs to qualify for a state-funded production tax credit aimed at keeping entertainment industry dollars in California.

The five-year, $500 million incentive program, signed into law in February, began accepting applications on July 1. In a statement, Schwarzenegger said the tax credits were crucial for retaining film and television productions -- and the economic multiplier effects -- in California.

"I fought hard for economic stimulus measures including the film and television production incentive, because we must do everything in our power to stimulate the economy and put Californians back to work," said Schwarzenegger. "This is about the makeup artists, the caterers and the countless other small businesses that rely on film and television production to succeed and create jobs for Californians."

The governor's announcement, citing statistics from the California Film Commission, pointed to a 50 percent decline in the number of films shot in California since 2003. In an effort to lure production back to the economically struggling state, the incentive program will cover 20 percent of expenses for feature films with budgets up to $75 million and 25 percent of expenses for independent films with budgets capped at $10 million. Eligible television programs that have filmed entirely outside California and have since relocated can receive credits for 25 percent of expenses.

Credits are limited to "below-the-line" expenses, such as crew salaries and cost of facility rentals. Wages of actors, writers and directors do not qualify under the program.

Schwarzenegger, a film star himself, has pushed for production tax breaks in the past but had previously been rebuffed by the Legislature, which viewed the incentives as a handout for an already-wealthy entertainment industry.

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Industry News Arnold Schwarzenegger gives California tax incentives.