The latest version of the bill on Georgia’s film and television production tax credit has brought in significant changes. The annual limit on tax credit transfers has been lowered to 2.3% of the state budget, which is approximately $830 million at current levels. This reduction comes as a surprise to the entertainment industry, as the previous limit set by the House was at 2.5% or $900 million. However, the Senate Finance Committee introduced major exemptions that effectively nullify the cap. One of the exemptions states that productions filmed at the largest Georgia studios would not be included in the cap. These large studios are determined by either having $100 million in investment through 2023 to 2027 or a footprint of at least 1.5 million square feet of stage space. This means that studios like Trilith and other major franchises are exempt from the cap, offering them a significant advantage over smaller sound stage owners unless they are located in rural areas outside the Atlanta metro area.
Additional Exemptions Making the Cap Meaningless
The revised bill introduced by the Senate Finance Committee has raised concerns among lawmakers due to the numerous exemptions that have been included. These exemptions allow hundreds of millions worth of eligible tax credits to be excluded from the cap, rendering it almost irrelevant. During a recent committee hearing, some lawmakers pointed out that the cap may not serve its intended purpose if these exemptions are upheld. The fate of the bill now lies in the hands of the Rules Committee, which will decide whether it will be scheduled for a vote on Monday. If the bill fails to pass through the committee, it faces the risk of not being approved before the end of the legislative session. On the other hand, if it does make it to the Senate floor, it will need to go back to the House for further deliberation. This back and forth process must be completed by next Thursday, adding to the uncertainty surrounding the fate of the bill.
The Impact on Film and TV Production in Georgia
Georgia has emerged as a major hub for film and television production, ranking among the top three in the world, thanks to its generous tax credit regime. The state offers substantial tax credits to production companies, attracting Hollywood studios and other industry players to film in Georgia. While a stricter auditing process was introduced a few years ago to regulate the claiming of tax credits, the state still incurs significant costs annually. House Bill 1180 aimed to make the annual expenditure more predictable by setting a cap on tax credits that are transferred or sold, as they form the majority of the total earned credits. Non-Georgia taxpayers often sell these credits at a discount to Hollywood studios, thereby stimulating the production industry in the state and contributing to its economy and job market. Despite its intentions, the bill has faced criticism for creating uncertainty due to its non-absolute cap and rollover provisions from one year to the next.
The latest developments in Georgia’s film and television production tax credit bill have raised questions about the effectiveness of the proposed cap on tax credit transfers. While the revisions have made the bill more favorable towards the industry, the significant exemptions introduced by the Senate Finance Committee may render the cap meaningless. The future of the bill remains uncertain as it awaits a decision from the Rules Committee, with the possibility of not being passed before the end of the legislative session looming large. The impact of this bill on Georgia’s thriving film and TV production industry will depend on how these exemptions are addressed and whether the bill can strike a balance between incentivizing production and managing costs effectively.