Georgia House backs bill to put limits on film tax credit cost

The Georgia House on Thursday voted to put limits on how much the state will spend on its lucrative film tax credit while at the same time requiring companies to do more to promote the state in order to get the maximum tax break.

House Bill 1180 was passed 131-34 over concerns that any limits will hurt the state’s burgeoning film industry.

The measure’s sponsor, Rep. Kasey Carpenter, R-Dalton, said the size of the tax break — film companies earned more than $1 billion in credits last year — would continue to increase as the state budget grows under the bill. Other provisions would ensure the state gets a bigger public relations bump from its support of the industry.

“It’s a great day for film in the state of Georgia,” Carpenter said. “This bill seeks to make this program sustainable for all Georgia taxpayers. ... It will make sure that the taxpayers of Georgia get the best bang for their buck while ensuring film continues to thrive in the state of Georgia.”

But Rep. Long Tran, D-Dunwoody, said, “There is a saying, if it’s not broke, don’t try to fix.”

Tran said he has produced four short films. He said the current tax credit program in Georgia is being copied throughout the country and is responsible for the industry’s rapid growth here.

Rep. Betsy Holland, D-Atlanta, said she lobbied for the film tax credit before being elected, and that the industry wouldn’t have flourished in Georgia without it.

“I get the sense sometimes that in this room, people have a feeling that they want to stick it to the Hollywood fat cats,” she said. “I sometimes want to stick it to the Hollywood fat cats.” But she added, “If we lost the film tax credit in whole tomorrow, Hollywood fat cats could make a decision like ‘that’ to move their production somewhere else.”

Under the bill, filmmakers — most of whom sell the tax credits — would only be able to collectively peddle the equivalent of 2.5% of the previous year’s state budget. If that change becomes law, that would work out to more than $900 million a year based on this year’s budget.

That figure would grow with the size of the budget. If the cap is reached any given year, companies would have to prorate any remaining credits and use them the following fiscal year.

Companies would have to do more to get an extra 10% credit they can now receive for embedding the Georgia logo in projects. They would have to meet four of nine possible criteria, such as hiring a certain percentage of crew members from Georgia, doing 50% of filming in rural areas or using Georgia music performances in films.

“Since I have been down here that’s always been a topic of conversation on the film tax credit, that it’s great for the metro (areas) but all areas of Georgia are supporting film, so they should all get a chance to get a piece of that pie,” Carpenter recently told the House Ways and Means Committee.

The film and TV tax credit in Georgia that passed in 2008 has been so generous it drew all major media companies to the state to shoot hundreds of films, scripted TV series, game shows and reality series.

Major TV and film producers to date have embraced the credit for its simplicity and the fact it is uncapped, meaning there is no limit to how much the state can dole out any given year.

But the film tax credit has also been a target at the Capitol because of its cost. The most recent state audit to examine the credit — released in December — said the industry will earn $1.35 billion worth of credits this fiscal year, rising to $1.4 billion by 2029. Meanwhile, the audit said Georgia’s growing film industry creates far fewer jobs than boosters say, and the tax credit costs taxpayers $59,455 per job.

The industry says it’s responsible for about $4.4 billion a year in direct spending in Georgia, and it estimates 92% of the film work done in the state wouldn’t occur without the ability to receive tax credits. Well over half of the states and many countries have incentives to lure film and TV production, and Georgia is competing with those locations, supporters say.

About 97% of the credits are sold by film companies that pay little in Georgia taxes because firms are often based in California and New York. Snatching them up are people or companies that owe state taxes, according to state auditors. Most of the credits are bought by individual taxpayers, the audit said.

For instance, if a film company spends $3.3 million 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. So they sell the credit at a slight discount to a person or company that owes state taxes.

The buyer may pay $900,000 for a $1 million credit. The film company gets $900,000, while the buyer saves $100,000 in taxes.

The measure now moves to the Senate for consideration.