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A cap on Georgia’s film and television production tax credit looks very different now in the latest version of a bill that passed from the House to the Senate.
The annual limit on tax credit transfers, the prospect of which caused some upheaval in the entertainment industry, was actually reduced to 2.3% of the state budget (about $830 million at current levels) in the latest version of the Senate, from 2.5% ($900 million) in the house. However, the Senate Finance Committee inserted some important exemptions that make the limit almost meaningless.
Primarily, productions filmed at Georgia’s largest studios would not count toward the limit. Big, according to the bill, means a $100 million investment between 2023 and 2027, or a footprint of at least 1.5 million square feet of stage space. So, don’t worry about productions at Trilith and some other big studio complexes that house Marvel and big franchises. Owners of smaller sound stages are not exempt unless they are located in rural areas outside of metro Atlanta. But there is much more space. Since the revised bill exempts hundreds of millions of eligible tax credits from the cap, there are hardly any, as some lawmakers pointed out at a committee hearing this afternoon.
The Rules Committee can change the bill, if it reaches Monday’s schedule. If you don’t, you die as the legislature is almost at the end of its session. If it passes through the Rules to the full Senate, it must return to the House and so on, and all the back and forth would have to be done next Thursday. So this bill is much better for film and television production than the original, but there may not be a bill at all, which would be even better for the industry.
Committee Chairman Chuck Hufstetler had not seen the bill until the hearing and “seemed very visibly unhappy with it,” said one person who was there, which may not be a good sign.
A generous tax credit regime has turned Georgia into a major film and television production center, one of the three largest in the world. A stricter auditing process implemented a few years ago made claiming the tax credits a little more complicated, but they still cost the state hundreds of millions a year. This bill, House Bill 1180, was an attempt to make the annual impact more predictable.
The limit provided is only for tax credits that are transferred or sold, which represent the vast majority of the total earned. Hollywood studios and other taxpayers outside Georgia can’t use the tax credits, so they sell them at a discount in what has become a thriving market. In turn, production contributes significantly to Georgia’s economy and employment.
The bill was also not a fixed limit, but rather a limit, as it allowed credits that exceeded the limit in one year to be carried over to the next. However, as critics have noted, it created some uncertainty.