Georgia Lawmakers Move to Limit Nation’s Largest Film Incentive

After studying the issue over the past eight months, Georgia lawmakers unveiled a proposal Wednesday to limit the state's lucrative tax incentives for film and television.

Georgia has the largest production tax credit in the country, with $1.24 billion in credits certified last year. Over the past decade, soundstages have sprung up around Atlanta and hundreds of productions have been produced in the state, including “May December,” “Black Panther,” “Stranger Things” and “The Walking Dead.” .

Unlike most other states, Georgia's credit is not capped. As it tops $1 billion a year, some lawmakers worry it poses a risk to state finances and makes it more difficult to reduce income taxes across the board.

“What we've seen from legislative leaders is a clear desire to rein in the overall cost of this program,” said Danny Kanso, a fiscal analyst at the Georgia Budget and Policy Institute.

Four officials, including the lieutenant governor and House speaker, unveiled a bill Wednesday that would limit the amount of credits that can be transferred in a year. The bill would also establish modest requirements for claiming the full amount — 30 percent of in-state production costs — instead of the 20 percent base.

“It’s all about using taxpayer dollars in the most effective and efficient way,” Sen. Chuck Hufstetler said at a news conference.

The bill, HB 1180, would not cap the amount of state-certified tax credits. But this would limit the ability of productions to monetize them.

The Georgia Screen Entertainment Coalition, which represents studios, production facilities and others in the industry, said in a statement that it was studying the bill.

“We are reviewing the legislation and will work closely with legislators to protect this program that has successfully built a Georgia-based film industry,” Executive Director Kelsey Moore said, adding that the tax credit created “billions of dollars in savings”. impact to benefit Georgians across the state.

The bill still needs to pass both houses of Parliament and is expected to face a barrage of lobbying and possible amendments.

A joint House-Senate committee began a comprehensive review of all of the state's tax credits last June, as lawmakers sought to assess whether they were generating a sufficient return on investment. In November, GSEC published a report arguing that every dollar of film credits creates $6.30 in economic benefits.

This incentive enjoys considerable support, as it has created thousands of production jobs and helped promote the state's image around the world. In 2022, lawmakers quickly ended efforts to cap the program at $900 million.

Stephen Weizenecker, an entertainment lawyer in Atlanta who focuses on film incentives, said the new bill shows lawmakers are trying to find common ground.

“This is a thoughtful plan to balance state and industry interests, and continue to encourage industry to grow in the state,” he said.

Most production companies are not based in Georgia and do not pay income tax. They sell their movie credits, at a low price, to Georgia corporations and wealthy individuals who are subject to state tax. A recent audit found that 97% of film tax credits are transferred to another party before being refunded.

The bill would limit the amount that can be sold each year to 2.5 percent of the state's estimated revenue, or $902 million for the coming fiscal year.

At the press conference, Hufstetler said the aim was to make it easier to repay the loans, so that the state would not face a heavy liability all at once.

“Some of them are kept for several years. They could all be bought out in a year,” he said. “It doesn’t really change the tax credits that exist.”

But Kanso said the practical effect would be to limit the size of the program.

“I think this is considered a first step,” he said. “It’s a way of putting a cap in the law without having to say it in such clear terms.”

If the limit had been in place in recent years, it likely would have been exceeded in 2017, 2018 and 2019, according to a review of state audit reports and budget data.

Credit redemptions have declined since 2020 due to the pandemic and a delay in utilization caused by a new audit requirement. But projections from state audits and budget documents show that the amount of credits expected to be repaid in 2025 and beyond would again exceed the limit set in the bill.

Under the bill, if credits cannot be transferred in a given year, they could be carried over to the following year. Hufstetler emphasized that there would still be no limit to claiming untransferred credits.

“Anyone who pays taxes in Georgia is not obligated to transfer them,” he said. “So we could have encouraged some companies to set up in Georgia as well. »

Under current law, credits are worth 20 percent of in-state costs, plus 10 percent if the film or television show displays a title card with the Georgia fishing logo. The bill would make it a little more difficult to get the additional 10%, requiring productions to meet at least four of these nine criteria:

  • at least 50% of the crew is from Georgia
  • at least 50% of sellers come from Georgia
  • at least $30 million is being spent in the state
  • at least 50% of photography days take place in a rural county
  • at least 50% of studio days are in a Georgia studio, or the company is making major improvements to a Georgia studio
  • at least 50% of studio days are in a Georgia studio, or the company signs a long-term lease with a Georgia studio
  • at least 20% of post-production or VFX is done by Georgian suppliers
  • participation in a workforce development program, such as the Georgia Film Academy
  • the fishing logo

The bill would also increase the spending threshold to qualify for credits from $500,000 in annual production activity to $1 million per project.

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