Originally posted Tuesday, August 21, 2018 by RODNEY HOfirstname.lastname@example.org on his AJC Radio & TV Talk blog
It was another banner year for Georgia’s film and TV entertainment business, courtesy of the state’s generous tax credits.
The state had 455 qualified TV and film productions in FY2018, which covers July 1, 2017 through June 30 of this year, by far the most since the tax credits were passed in 2008. To qualify, a production needs to spend at least $500,000 in the state and the company can receive up to a 30 percent tax credit.
The Governor’s office said there was $2.7 billion in direct spending in the state from these productions, which ranged from “The Walking Dead” and “Ozark” to “Tag” and “Mile 22,” which came out this past weekend. That is about the same amount as the previous year, when some big-budget extravaganzas such as “Black Panther” and “Avengers: Infinity War” were in production.
Overall, it’s ten-fold increase from 2008 before the tax credits were sweetened.
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To get that spending, the state handed out $800 million in tax credits to film production companies in FY2017, according to the Georgia Performance Measures Report. That’s up from $89 million in FY2009, the first fiscal year when the current tax credits were in effect. Given that direct spending was about the same this past fiscal year, the amount of tax credits dispensed should be in the same neighborhood.
That $800 million is by far the most any state has handed out in the country, ahead of New York ($420 million) and California ($320 million.)
It’s now also the biggest tax credit handed out by the state. (That amount is equal to 3.4 percent of the state budget of $26.2 billion.) Over ten years, the state has dispensed more than $4 billion in film tax credits.
Using a “multiplier” impact of 3.57, the state claims $9.5 billion in total economic impact. My former colleague April Hunt in a Politifact story in 2015 noted that for more than three decades, the state economic development department has used this multiplier figure. This presupposes that every $1 in direct spending cycles through the Georgia economy so $3.57 is ultimately spent.
But Bruce Seaman, an associate economics professor at Georgia State University who has worked on economic impact studies, said that multiplier is vastly overstated and the state has never fully explained why it still uses it beyond the fact it helps keep an apples-to-apples comparison to past numbers.
He thinks a more reasonable multiplier is 1.87, or about half as much as stated.
On the other hand, the direct spending figure fails to capture other positive aspects of the Hollywood presence in Georgia. For instance, it doesn’t include tourism stemming from folks come into Georgia to visit places show on “The Walking Dead,” “Hunger Games” or “Black Panther.”
It also fails to incorporate the tangible infrastructure that has built up largely around metro Atlanta. There are at least 50 different studio options out there now in all sizes, some just fine for small indie productions while others are big enough to handle Marvel movies.
And Georgia is now handling more film and TV post production while more crew members and actors reside locally rather than fly in from out of state. A-list comedy star Melissa McCarthy, for instance, spends so much time here making movies she has even purchased a home here.
So Seaman said an overall economic impact in the neighborhood of $6 billion is not out of the question.
The overarching question is: is it worth it?
The Georgia film office has never done a deep dive into the impact of the film tax credits and whether it provides the state with a net positive economic impact.
As the Pew Institute noted in a study last year, “Georgia lacks a process for evaluating the film tax credit and other incentives.”
California does detailed studies regularly on its incentive program. You can read its most recent 2017 report here. Florida earlier this year did a Return on Investment calculation for its various credits over the years and concluded a significant negative tax return. A 2013 Louisiana study of its film tax credits indicated a net loss as well and led to the state capping its credits to $180 million a year.
Seaman said Georgia receives nowhere close to the $800 million a year in forgone tax revenues it is giving up with the film tax credit. But he said if you incorporate other financial benefits, without having done his own detailed study, he still thinks the impact of the credit is a net gain for the state.
The state provided this data in its press release: “According to the Motion Picture Association of America, the motion picture and television industry is responsible for more than 92,100 jobs and nearly $4.6 billion in total wages in Georgia, including indirect jobs and wages. Since 2010, more than 300 new businesses have relocated or expanded in Georgia to support the industry.”
The state of Georgia refuses to release how much in credits it gives for each individual production. Most other states provide that data. Louisiana, for instance, maintains an online database with detailed information on each production’s total budget, amount spent in the state, amount spent on payroll and total tax credits awarded.
The tax credits go to qualified production companies. If they don’t need to offset their state taxes, they can sell the credits to other corporations or high-wealth individuals on the open market, typically at around 90 cents on the dollar. (I wrote a detailed explainer regarding the credits last year.)
Most states, including New York and California, cap their tax credits. Georgia has no cap, which is partly why so many big-budget films are willing to shoot here.
The state tied for second with the U.K. in 2017 for most films among the top 100 domestic films with 15 behind only Canada at 20. Georgia was first in 2016, according to FilmLA, which was able to glean Georgia-based big-budget movie budgets from news reports.
The U.K. and Canada, like Georgia, have no annual caps on tax credits. According to the FilmLA report, Georgia hands out the second-most film tax credits in the world behind only the U.K. at $820 million.
Among the films shot at least in part in Georgia that were released into theaters the past year (though many were shot before July 1, 2017) include “Black Panther,” “Ant-Man and the Wasp,” “Rampage,” “The Spy Who Dumped Me,” “Life of the Party,” “Den of Thieves,” “I, Tonya,” “Love, Simon,” “Blockers” and “Game Night.”
TV shows in production the past year here include CBS’s “MacGyver,” Netflix’s “Queer Eye,” Netflix’s “Stranger Things,” YouTube Premium’s “Cobra Kai,” FX’s “Atlanta” and OWN’s “Greenleaf.”