Georgia Drops Effort to Encourage Billion-Dollar Film Incentives

Georgia has given up on trying to cap its billion-dollar film and TV tax credit after the state House and Senate were unable to reach an agreement on the issue.

Lawmakers have been working for nearly a year on proposals to control the incentive, which is the largest of any state in the country. But Common Meeting ended its session Friday morning without passing a bill on the issue in both houses.

Lawmakers will now have to show up until the next session, starting in January 2025, to resolve the issue.

The failure to meet the bill is a relief for Georgia’s film industry, which relies heavily on the incentive and has been watching the legislation closely. The Georgia Display Entertainment Coalition, which represents studios and other industry stakeholders, hailed the result as proof that the state remains “open for business.”

“After much study and debate, the General Assembly has left in place the tax credit policy that has served the state so well, working exactly as intended,” Kelsey Moore, the group’s executive director, said in a statement. “Our state government sent out a transparent, literally international statement that Georgia strongly supports the film industry.”

Georgia offers a 30% credit on film and TV production costs, which has been used to subsidize hundreds of productions, including Marvel films like “Black Panther” and shows like “Stranger Things” and “The Walking Dead.” . Credit transformed Atlanta into a major industrial center, competing not only with California and New York, but also with the United Kingdom. and Canada.

Unlike most other states, Georgia does not restrict the total amount of credit that can be issued annually. As this system has surpassed a billion dollars in recent times, some lawmakers have begun to fear that it poses a danger to state funds.

In February, the state House of Representatives approved a measure that will limit the amount of credit that can be purchased and purchased annually.

Since most entertainment companies are not based in Georgia, they cannot use film credits to offset their own tax liabilities. Alternatively, they promote them at a slightly low cost to Georgia-based companies or wealthy individuals. With a cap in place, they could be caught with credit that they might not monetize.

The Home project faced resistance from studio facility owners who invested hundreds of thousands of dollars in new soundstages. They feared that such a limit would mean that companies like Disney and Netflix would no longer be guaranteed to be able to sell their credit.

Senate lawmakers were attentive to these issues. Last week, the Senate Finance Committee approved the cap but created major exceptions for projects carried out at three major production facilities – Trilith Studios, Shadowbox Studios and Meeting Atlanta.

The change created problems for smaller studios, which would face difficulties competing for productions. Some lawmakers also believed this would make the cap irrelevant because it will never be reached.

And this did not please the domestic management.

“Turning a fiscally responsible measure designed to protect Georgia taxpayers, with all stakeholders in mind, into an aggressive benefit for three Atlanta-based movie studios was not our goal,” said Rep. Shaw Blackmon, chairman of the House and Methods Committee. Home Resources. , via email on Thursday morning. “And that’s what the Senate concluded.”

Given the lack of consensus between the houses, the project seemed useless heading into the last day of the session. But the House tried to save the measure on Thursday by gutting another bill and amending it with a new version of the proposed cap.

The internal measure would have capped the amount of credit that could be transferred to 2.5% of the state budget — or about $900 million next year — with no exceptions for major studios. It was the same as the original invoice.

But the new version provided that the limit would be triggered as long as the state’s reserve fund fell below 10% of total state revenues. In other words, if the state were hit by a serious economic crisis, it could activate a brake on the use of film credit – mainly defending the state from a bank run.

Such a limit would likely not be imposed anytime soon. Reserves have soared over the past three years, reaching 45% of revenues in fiscal 2023. The reserve fund has fallen below the ten% threshold only since 2016.

The House authorized the revised measure with a vote of 170-1 Thursday night. But the Senate suspended without taking up the bill, effectively killing it for the year.

The Senate committee’s model also included a provision that would make residual compensation subject to Georgia income tax. This provision would have applied to writers, actors, and administrators who reside outside the state but whose work is produced in Georgia.

This was also controversial.