PvNew | Internet Celebrity Wiki

Georgia Lawmakers Back Away From Capping $1 Billion Film Incentive

  2024-03-24 varietyGene Maddaus31990
Introduction

Georgia lawmakers on Wednesday backed away from a proposal to cap the state’s $1 billion incentive for film and TV produ

Georgia Lawmakers Back Away From Capping $1 Billion Film Incentive

Georgia lawmakers on Wednesday backed away from a proposal to cap the state’s $1 billion incentive for film and TV production.

The state tax incentive has turned Georgia into a major production hub over the last decade, attracting Marvel movies and TV shows like Netflix’s “A Man in Full” and “Stranger Things” with a 30% rebate on all in-state production costs.

But as the program has exceeded $1 billion annually in recent years — far surpassing the incentives offered by any other state — some lawmakers have begun to try to rein it in. In February, the state House of Representatives passed a bill that would limit the tax credits that could be sold annually to 2.5% of the state budget — or about $900 million next year.

The Senate Finance Committee effectively torpedoed that provision at a meeting on Wednesday night. Lawmakers passed a version of the bill on an 8-6 vote that lowers the cap to 2.3% but exempts projects made at the state’s largest studio facilities.

Sen. Chuck Hufstetler, the chairman of the committee, said in an interview that the exemption has the effect of eliminating the cap.

“I can’t imagine anybody reaching the cap under the version we have,” said Hufstetler, R-Rome.

The newest version is the result of talks between Lt. Gov. Burt Jones and film industry representatives, according to Hufstetler and Rep. Kasey Carpenter, the chair of the House Creative Arts and Entertainment Committee.

Carpenter noted that investors are putting billions into studio infrastructure, and they are worried about the effect that the House version would have on the industry.

“There was some concern that the cap we sent over — because there’s so much new construction going on — might hurt the ability of some of these big studios that are getting built to stay busy,” Carpenter, R-Dalton, said in an interview.

Hufstetler has been trying to put limits on the film credit for a couple of years, out of concern that it poses a risk to state finances. In 2022, he proposed a straightforward $900 million cap. But that move generated backlash and was killed within days.

This time around, he worked with Jones and House leadership to conduct a top-to-bottom review of all of the state’s tax incentives. That process lasted about eight months and resulted in the House proposal to limit sales of state film credits.

The transfer cap offered a roundabout means of limiting the tax credit. The vast majority of companies that film in Georgia are based elsewhere, and thus have little or no state income tax liability. As a result, about 97% of film credits issued by the state are sold to another party before they are redeemed.

The House bill did not limit the amount of credits that the state could issue, but did restrict the amount that could be sold from one party to another in a given year to 2.5% of the budget. That effectively limited the rate at which credits could be redeemed, capping the fiscal impact and making it more predictable. Any credits that could not be transferred in one year could roll to the next.

In the industry, the fear was that productions would no longer be able to count on automatically getting their 30% rebate. In recent years, the total volume of transfers has varied considerably. It did not come close to the proposed limit in 2022 or 2023, according to data released by the state Department of Revenue. But transfers did exceed that threshold in 2020 and 2021, and came close in 2019, according to the data.

“You’re making it very complicated for a new production to assess whether they’re going to get tax credits in a timely fashion,” said Ryan Millsap, CEO of the Blackhall Group, in an interview last month. “One of the things that’s been great about the Georgia tax credit is it’s so simple. Georgia has punched way above its economic weight, going head-to-head with Canada and the U.K.”

The version approved in the Finance Committee on Wednesday appeared likely to eliminate that fear. Projects would not count against the cap if they are shot at a soundstage facility where investments of at least $100 million were completed between Jan. 1, 2023, and June 30, 2027. The facility would also qualify for exemption if it had at least 1.5 million square feet of stage space.

Sen. Greg Dolezal, R-Alpharetta, argued at the committee hearing that the exemptions would make the cap meaningless.

“My understanding is the way this would currently work would be three studios would qualify,” he said. “Essentially, if we do this, my question would be, ‘Why do we have a cap?'”

Industry groups declined to comment on the latest development.

The bill is not over the finish line yet, and some provisions may yet change. The Finance Committee version next goes to the Rules Committee and then on to the full Senate. If the House refused to pass the Senate version, it would go to a conference committee.

Hufstetler said he continues to have concerns about the return generated by the state’s investment in film credits.

“The cost to the state of Georgia is about $60,000 per job,” he said. “Which is a lot to create a job, and some of these end up being temporary jobs.”

He also noted that a recent audit found that for every $1 of film credits, the state gets back 19 cents.

The Senate version retains a House provision that makes it a little harder for productions to increase the 20% base credit to 30%. Under current law, a movie or TV show simply has to display a title card with the Georgia peach logo to claim the extra 10%. The new version would give productions a menu of options, requiring them to meet at least four of nine criteria to qualify.

The criteria include things like hiring at least 50% of the crew from Georgia, filming in underutilized areas of the state, partnering with the Georgia Film Academy’s workforce development program, and using the peach logo.

Carpenter said that the Senate version would keep Georgia competitive with other states and countries, and safeguard the state’s place as a premiere filming destination.

“We’re big fans of the industry,” he said. “The state of Georgia is real committed to film. We don’t want that message to get lost.”

(By/Gene Maddaus)
 
 
Dislike 0 Report 0 Favorite 0 Awards 0 Comments 0
0 itemsRelated comments
 

(c)2019-2024 PvNew All Rights Reserved |