Georgia Drops Effort to Cap Billion-Dollar Film Incentive

3

[ad_1]

Georgia has dropped an effort to cap its billion-dollar film and TV tax credit, after the state House and Senate could not reach agreement on the issue.

Lawmakers have been working for nearly a year on proposals to rein in the incentive, which is the largest of any state in the nation. But the General Assembly adjourned its session early Friday morning without passing a bill on the subject out of both houses.

Legislators will now have to wait until the next session, beginning in January 2025, to address the issue.

The failure to pass a bill is a reprieve for the Georgia film industry, which relies heavily on the incentive and had been watching the legislation closely. The Georgia Screen Entertainment Coalition, which represents studios and other industry stakeholders, hailed the outcome as proof that the state remains “open for business.”

“After much study and debate, the General Assembly has kept 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 leadership has sent a clear statement, literally across the world, 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 movies like “Black Panther” and shows like “Stranger Things” and “The Walking Dead.” The credit has transformed Atlanta into a major production hub, competing not only with California and New York but also with the U.K. and Canada.

Unlike most other states, Georgia does not limit the total amount of credits that can be issued annually. As the program has surpassed $1 billion in recent years, some lawmakers have begun to worry that it poses a risk to the state’s finances.

In February, the state House of Representatives passed a measure that would cap the amount of credits that could be bought and sold each year.

Since most entertainment companies are not headquartered in Georgia, they cannot use film credits to offset their own tax liability. Instead, they sell them at a slight discount to Georgia-based corporations or wealthy individuals. With a cap in place, they might be stuck with credits they could not monetize.

The House bill faced pushback from owners of studio facilities who have invested hundreds of millions of dollars in new soundstages. They feared that such a cap would mean that companies like Disney and Netflix would no longer be guaranteed to be able to sell their credits.

Senate lawmakers were responsive to those concerns. Last week, the Senate Finance Committee approved the cap, but carved out major exceptions for projects shot at three large production facilities — Trilith Studios, Shadowbox Studios, and Assembly Atlanta.

The change created concerns for smaller studio facilities, who would face a disadvantage in competing for productions. Some lawmakers also believed that would render the cap irrelevant, because it would never be hit.

And it did not sit well with House leadership.

“Turning a fiscally responsible measure designed to protect Georgia taxpayers, considerate of all stakeholders, into a competitive advantage for three Atlanta-based film studios was not our objective,” said Rep. Shaw Blackmon, the chairman of the House Ways and Means Committee, in an email early on Thursday. “And that’s what the Senate has done.”

Given the lack of consensus between the houses, the bill appeared to be dead heading into the final day of the session. But the House attempted to salvage the measure on Thursday by gutting another bill and amending it with a new version of the proposed cap.

The House measure would have capped the amount of credits that can be transferred at 2.5% of the state budget — or around $900 million next year — without exceptions for the large studios. That was the same as the original bill.

But the new version provided that the cap would be triggered only if the state’s reserve fund fell below 10% of total state revenues. In other words, if the state were hit with a severe economic downturn, it could activate a brake on the usage of film credits — essentially protecting the state from a run on the bank.

Such a cap would likely not be imposed any time soon. Reserves have soared in the last three years, reaching 45% of revenues in the 2023 fiscal year. The reserve fund fell below the 10% threshold only once since 2016.

The House approved the revised measure on a vote of 170-1 on Thursday evening. But the Senate adjourned without taking up the bill, effectively killing it for the year.

The Senate committee version also included a provision that would make residual compensation subject to Georgia income tax. That provision would have applied to writers, actors and directors who live out of state, but whose work is produced in Georgia.

That, too, was controversial.

[ad_2]

Source link

Leave A Reply

Your email address will not be published.