Georgia lawmakers question film tax break for sporting events

Some state lawmakers are questioning a proposed expansion of Georgia’s film tax credit that would allow broadcasters of major sporting events to qualify for the break.

House Bill 1037 would require every film, television and media production that qualifies for the tax break to be audited. And it would impose other measures to ensure the $800 million-a-year tax break rewards productions that benefit Georgia — a concern raised in a recent state audit.

But the bill also would expand the tax break for the first time to major sporting events. The credit would be awarded to companies that broadcast non-recurring events that have an economic impact of $50 million or more — events such as the Super Bowl and the NCAA Final Four basketball tournament.

Rep. Matt Dollar, R-Marietta, the bill's sponsor, said the language was suggested by the Metro Atlanta Chamber, which hopes to lure five to seven matches of the 2026 World Cup to Atlanta. He said the 2018 World Cup in Russia drew 15,000 journalists. The 2026 games will feature more teams — potentially attracting more journalists and generating more coverage.

Dollar said those journalists would fill hotel rooms, spend money and give Georgia worldwide exposure. He said companies would have to meet other requirements to qualify for the tax break.

“This is a very valuable tool that we can use to attract economic activities and economic events that mean big money and big exposure to our state,” Dollar told the House Working Group on Creative Arts and Entertainment on Thursday.

Some lawmakers were skeptical. Rep. Chuck Martin, R-Alpharetta, wondered why Georgia would award tax breaks to media companies that would cover big sporting events. He said some events rotate through Atlanta every few years without the tax credit.

“I want to make sure that we’re gaining new business, not paying for people who are already coming,” Martin said.

Rep. Winfred Dukes, D-Albany, wondered what effect the expanded tax credit would have on state services.

“When we reduce the treasury by a billion dollars, then we have to cut the budget,” Dukes said.

The provision for sporting events may not be the only expansion of the tax credit. On Friday, Rep. Beth Moore, D-Peachtree Corners, an entertainment attorney, proposed an amendment that would allow the licensing of music for soundtracks to qualify for the tax credit.

Moore said the provision would create an incentive for producers to license music from Georgia artists. She said it could also encourage music publishers to move from California to Georgia. The committee did not take action on the proposal.

Lawmakers said they did not know the potential cost of expanding the tax credit to sporting events and music licensing.

Georgia has awarded about $4 billion in tax credits over the life of the film tax credit program, including $870 million last year. More than 450 movies, TV shows and other productions were eligible for tax credits in 2016 alone.

Supporters say the credit has helped make Georgia the Hollywood of the South. Dollar said the tax credit has generated a 7-to-1 return on investment.

But the recent state audit found the economic impact of the tax credit has been greatly exaggerated. J.C. Bradbury, an economist at Kennesaw State University who has studied the credits, said they're a money-loser for Georgia taxpayers — generating about 30 cents on the dollar.

“You take money out of my pocket and give it to Tyler Perry, then you say, ‘Look how better off you are!’ ” he said.

Bradbury said it would be “completely inappropriate to expand the tax credits to other industries.”

The state audit also found companies received millions of dollars’ worth of credits they didn’t earn.

Among other things, the audit found credits granted for ineligible expenditures, such as work done outside Georgia. And it found weak oversight that made the program “ideal for fraud.”

HB 1037 would require every production to be audited, with the requirement phased in over three years. Tax credits would be awarded after the audits are completed.

The bill also takes steps to strengthen the qualification process for the tax credit.

“The numbers show that it has been successful,” Dollar said of the tax credit. “But we need to strengthen the process.”

The committee is expected to vote on the measure Monday.