The latest audit estimates the industry will earn $1.35 billion worth of credits this fiscal year, rising to $1.4 billion by 2029.
The latest state audit on the film tax credit was posted Thursday, less than a month before the start of the 2024 legislative session. It also comes following a months-long joint House-Senate committee study on the value of the billions of dollars in tax breaks the state gives out to businesses.
Lawmakers have debated capping the film tax credit at $900 million a year and successfully pushed for mandatory auditing of projects that receive the credits, which delays payments to the industry.
Kelsey Moore, executive director of the Georgia Screen Entertainment Coalition, said, “the incentive is crucial to keeping the (film) industry here. Anything that harms our competitiveness will harm industries that have invested in it.”
The industry estimates 92% of the film work done in Georgia — about $4.4 billion in direct spending a year — wouldn’t occur without the ability to receive tax credits.
“The idea that without the incentive we would still have an industry is false,” she said.
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.
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 or cut the incentive.
There is also a political element: Georgia’s Capitol is run by Republicans. Some Republicans have complained that the industry has brought in workers more sympathetic to Democratic candidates. Democratic President Joe Biden and the state’s two Democratic U.S. senators narrowly won election in 2020, breaking a decades-long string of GOP victories.
Earlier this year, then-state fiscal economist Jeffrey Dorfman told the joint House-Senate panel continuing huge tax breaks for “mature industries,” such as Georgia’s film industry, makes less sense and the state “should be looking to shrink or end those credits.”
Ahead of hearings that started last spring, film industry advocates produced a lengthy report compiled by the Georgia State University Creative Media Industries Institute touting the benefits of the film tax credit. Backers said the tax break had led to a mushrooming of the movie and TV production industry in the state that brought $4.4 billion in direct spending 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 film was responsible for just under 60,000 direct and indirect jobs.
The recent state audit says about 34,354 jobs are associated with film production spending, tourism and construction.
The tax credit has also helped spur investment in other ways, backers say, including an estimated 5.5 million square feet of studio space and educational programs to prepare Georgians to work in the industry.
At a tax hearing in October, Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, a co-chairman of the study committee, said surrounding states without tax breaks, or with much smaller ones, have also hosted a lot of filming in recent years.
Credit: TNS
Credit: TNS
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 97% 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. 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. It’s lucrative for them to sell the credit to a person or company that owes state taxes 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 on his or her taxes.
Hoping to show filming isn’t just a big-city thing, industry officials have said there have been nearly 1,000 film productions outside of metro Atlanta, and the industry’s report pointed to big job growth there.
That’s an important selling point because almost all of the General Assembly’s majority Republican leadership comes from outside metro Atlanta.
State auditors looked at the film tax credit program in 2019-2020 and found the program allowed some companies to receive credits they didn’t earn. That year lawmakers — working with the industry — passed legislation requiring auditing of projects. That means a company may not get the credits until well after they have finished production.