Big changes loom for Georgia’s film tax credit

Georgia legislative leaders’ pledge to rein in some of the state’s generous tax breaks to industry is starting with the most expensive on the books: the film tax credit.

A bill introduced in the Georgia House of Representatives earlier this month would require film production companies to meet at least four of nine criteria to qualify for an additional 10% tax credit on top of the 20% base credit the General Assembly enacted in 2008. House Bill 1180 also would raise the minimum companies would have to spend to earn the credit, and put new limits on the selling of credits.

“Our film tax credit has been very, very successful for Georgia,” House Speaker Jon Burns, R-Newington, said Feb. 7 during a news conference unveiling the bill. “We want to make sure that we streamline our tax credit so we continue to get the absolute best return on that investment.”

The film tax credit is widely credited with making Georgia one of the top movie and television production states in the nation. The existence of the credit generated $8.55 billion in economic impact in fiscal 2022, according to a study released late last year.

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“What we have created here in Georgia is more extraordinary than you may realize,” independent filmmaker Tiffany FitzHenry of Peachtree City told members of the House Economic Development & Tourism Committee Feb. 13.

“We have the largest, most skilled crew base in the world, infrastructure and technology that is second to none, more stages, camera-ready communities and a bigger footprint for production than anywhere on the planet.”

At the same time, the film tax credit is costing Georgia taxpayers about $1 billion a year in lost tax revenue, making it by far the most expensive in the state’s arsenal of tax incentives.

The General Assembly first sought to limit that fiscal impact on the state’s coffers in 2020, passing legislation requiring all film productions located in Georgia to undergo mandatory audits by the state Department of Revenue or third-party auditors selected by the state agency.

But House Bill 1180 promises to be more far-reaching in its potential impact.

Under the bill, film production companies must meet at least four of the following criteria to qualify for the most lucrative tax credit:

• At least 50% of the crew on a given film production working in the state must be Georgia residents.
• At least 50% of the vendors providing goods or services to film production crews must be Georgia vendors.
• The film production company must spend at least $30 million in Georgia.
• At least 50% of a production’s photography days must occur in one or more rural counties in Georgia.
• At least 50% of the photography days in studio facilities must take place in Georgia studios, or the company must make capital improvements to a studio.
• At least 50% of the photography days in studio facilities must take place in Georgia studios, or the company must enter into a long-term lease for a studio in Georgia.
• At least 20% of a company’s post-production spending must be with Georgia vendors.
• The company must participate in at least one Georgia workforce development program.
• The company must include the Georgia promotional logo in its final production or engage in alternative marketing opportunities approved by the state Department of Economic Development.

The bill also doubles the amount a production company must spend on a single production to qualify for the tax credit from $500,000 to $1 million.

A third provision would cap the total amount of sales or transfers of credits within a calendar year at 2.5% of the governor’s revenue estimate for that year.

The bill has been endorsed by the Georgia Budget and Policy Institute, which has long called for tighter controls on the state’s tax incentives.

“These common-sense safeguards would keep hundreds of millions of Georgians’ tax dollars in-state, rather than flowing to enrich out-of-state corporations, while placing important guardrails to better manage the state’s largest tax credit program,” said Danny Kanso, the organization’s senior fiscal analyst.

Representatives of the state’s film industry have pledged to work with lawmakers on the bill as it moves through the General Assembly while ensuring it doesn’t endanger what has been a hugely successful program.

“Georgia legislators and state leaders have a long history of bipartisan, pro-job creation policy decisions that have allowed our state’s film and television production industry to compete on the world stage, creating billions of dollars in economic impact to the benefit of Georgians across the state,” said Kelsey Moore, executive director of the Georgia Screen Entertainment Coalition.

“GSEC is committed to continuing to work with state legislators to maintain our state’s successful film tax credit and the economic opportunity it fuels for tens of thousands of Georgians and businesses.”