ATLANTA — Georgia’s effective but expensive film tax credit came up for discussion during a legislative hearing on deep budget cuts lawmakers will face when they resume the 2020 General Assembly session next month.
The state’s growing film industry generated about $8.5 billion in economic impact during the last fiscal year, including $2.9 billion in direct spending, Pat Wilson, commissioner of the Georgia Department of Economic Development, told members of a state Senate Appropriations subcommittee.
About 90,000 Georgians were employed in film and TV productions before the coronavirus pandemic shut down the industry, Wilson said.
However, Georgia’s most expensive tax credit also costs state taxpayers about $400 million a year.
With Gov. Brian Kemp and legislative leaders looking to reduce state spending even before COVID-19 hit the state, the cost of the tax credit prompted two critical audits last January. Those audits, in turn, helped spur the introduction of legislation calling for stricter rules on the transfer or sale of unused credits, a common practice for production groups that base part of their movie-making work outside of Georgia.
Prohibiting the transfer of film tax credits might convince more studios that film in Georgia to move their entire operations to the Peach State, Sen. Jen Jordan, D-Atlanta, a member of the subcommittee, suggested.
But Wilson said Georgia would lose a significant amount of its film business if the state tried to force film producers to put their headquarters here or lose the tax credits.
“The studios that are writing the checks and paying the money are in Los Angeles,” he said. “A lot of them are moving operations here. That doesn’t mean they’re going to leave the talent base they have in California.”
Meanwhile, Wilson outlined how the economic development agency plans to prioritize its operations while cutting its budget by nearly $5 million to meet 14% across-the-board spending reductions state agencies are being required to offer up to help offset a substantial loss of tax revenue resulting from the coronavirus-driven economic lockdown.
He said the department’s marketing activities in global commerce and tourism will absorb the brunt of the cuts rather than the payroll.
“We have a great pipeline [of potential projects] in practically every division,” he said. “We decided to keep personnel so we could work the pipeline we have now.”
But Wilson warned that depleting the agency’s marketing funds will only work in the short run, to get the department through the tight fiscal 2021 budget.
“The long-term impact will be significant if we don’t come back with marketing,” he said. “We are going to have to grow back.”