Howell was one of several presenters to speak during a four-hour hearing in Athens before a committee that will recommend whether any of the state’s dozens of tax breaks should be eliminated, reduced or expanded.
The film tax credit has drawn substantial attention because the industry has exploded in the state over the past decade. It is also a big target at the Capitol because it is one of the biggest tax breaks lawmakers have approved. That has meant industry lobbyists have had to work double time to put down efforts to cap the incentive.
State auditors have called the industry’s tax credit of about $1 billion a year the most lucrative of its kind in the country.
Earlier this year, then-state fiscal economist Jeffrey Dorfman told the joint House-Senate panel that continuing huge tax breaks for “mature industries,” such as Georgia’s film industry, makes less sense and that the state “should be looking to shrink or end those credits.”
Ahead of the hearings beginning this spring, film industry advocates put out a glossy, lengthy report compiled by the Georgia State University Creative Media Industries Institute touting the benefits of the film tax credit. Backers say the tax break has led to a mushrooming of the movie and TV production industry in the state that brought $4.4 billion in direct spending here last year.
A report by Olsberg SPI, London-based consultants who do work for the industry, put the overall economic impact of the industry in Georgia even higher and said it was responsible for just under 60,000 direct and indirect jobs.
Eleanor Jubb, associate director of the firm, said a survey of industry officials found 92% said they wouldn’t have invested in Georgia without the tax credit.
Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, a co-chairman of the study committee, said surrounding states without any tax breaks, or with much smaller ones, have also hosted a lot of filming in recent years.
“No doubt it has brought jobs to Georgia, no doubt it’s been a boon to get companies to come here,” Hufstetler said. “I’m not sure I am comfortable with a survey of people saying ‘What would you do if it (the tax break) wasn’t here?’ ”
Rep. Chuck Martin, R-Alpharetta, another member of the committee, also questioned some of the report’s economic impact findings. “We value the industy,” he said. “When I get numbers like this, I say, ‘How could that be?’ "
But Frank Patterson, president of the massive Trilith Studios in Fayette County, said the film tax credit has helped the industry flourish in Georgia and produced a stable economic environment for companies to make mega-investments in the state.
“These dollars would not have been invested without the tax credit,” he said.
The film tax credit is popular at the Capitol, and leaders aren’t talking about doing away with it.
However, Hufstetler has proposed putting a $900 million-a-year cap on the fast-growing credit. Under pressure from industry lobbyists, Senate leaders backed away from that proposal after it passed Hufstetler’s committee near the end of the 2022 session.
About 80% of the credits are sold by film companies that pay little in Georgia taxes. Snatching them up are people or companies that owe state taxes, according to state auditors.
So, for instance, if a film company spends $3,333,333.33 in Georgia and meets all the necessary state criteria, it can earn a 30% tax credit worth $1 million.
But since many companies aren’t based in Georgia, they owe little or no money in state taxes. It’s lucrative for them to sell the credit to a person or company that owes state taxes, most likely at a slight discount.
The buyer may pay $800,000 for a $1 million credit. The film company gets $800,000, while the buyer saves $200,000.
The state Department of Audits and Accounts plans to put out a new review of the film tax credit program by the end of the year.