The Georgia Senate’s tax panel on Wednesday softened a bid to put limits on how much the state spends on its lucrative film tax credit while at the same time requiring companies to do more to promote the state’s industry in order to get the maximum tax break.
The Senate Finance Committee passed House Bill 1180 after hearing concerns that any limits would hurt the state’s burgeoning film industry. Industry lobbyists have been working the General Assembly hard for months to tamp down efforts to cap the program.
The measure’s sponsor, Rep. Kasey Carpenter, R-Dalton, said the size of the tax break — film companies earned more than $1 billion in credits last year — would continue to increase as the state budget grows under the bill.
“We tried to strike a balance between being fiscally responsible and making sure we were going to nurture this industry,” Carpenter said.
Under the bill as passed by the committee, filmmakers — most of whom sell the tax credits — would only be able to collectively peddle the equivalent of 2.3% of the previous year’s state budget. However, that section of the bill was softened by exempting at least some big Georgia studios.
“I am not sure that cap will ever get hit,” said Senate Finance Chairman Chuck Hufstetler, R-Rome.
Companies would have to do more to get an extra 10% credit they can now receive for embedding the Georgia logo in projects. They would have to meet four of nine possible criteria, such as hiring a certain percentage of crew members from the state, doing 50% of filming in rural areas or using Georgia music performances in films.
The film and TV tax credit in Georgia that passed in 2008 has been so generous it drew all major media companies to the state to shoot hundreds of films, scripted TV series, game shows and reality series.
Major TV and film producers to date have embraced the credit for its simplicity and the fact it is uncapped, meaning there is no limit to how much the state can dole out any given year.
But the film tax credit has also been a target at the Capitol because of its cost. The most recent state audit to examine the credit — released in December — said the industry will earn $1.35 billion worth of credits this fiscal year, rising to $1.4 billion by 2029. Meanwhile, the audit said Georgia’s growing film industry creates far fewer jobs than boosters say, and the tax credit costs taxpayers $59,455 per job.
The industry says it’s responsible for about $4.4 billion a year in direct spending in Georgia, and it estimates 92% of the film work done in the state wouldn’t occur without the ability to receive tax credits. Well over half of the states and many countries have incentives to lure film and TV production, and Georgia is competing with those locations, supporters say.
About 97% of the credits are sold by film companies that pay little in Georgia taxes because firms are often based in California and New York. Snatching them up are people or companies that owe state taxes, according to state auditors. Most of the credits are bought by individual taxpayers, the audit said.
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