Lawmakers, filmmakers still tout tax credit following damning reports

Georgia’s film industry came to the Capitol Wednesday to celebrate another big year, months after two scathing reports raised doubts about the state’s return on its generous film tax credit.

“Georgia film is booming,” said Georgia Department of Economic Development Chief Operating Officer Bert Brantley. “In fiscal year 2019, Georgia saw a new filming record with $2.9 billion dollars in direct spending on productions. The economists can argue about economic impact all they want, but these are dollars that are being spent in Georgia.”

House Speaker David Ralston told the crowd of over 100 gathered in front of the steps inside the Capitol that many of those dollars are spent in Georgia because of the state’s 2005 tax incentive program.

Under it, film, television and digital entertainment companies can receive up to a 30% tax credit if they spend $500,000 or more in Georgia and include a Peach logo in their work.

“Georgia is depicted on screens large and small because of this credit,” Ralston said. “And let me assure you today as I have each year that you have been here, there is no bigger supporter of the film tax credit than I am.”

Still, it is unclear if that incentive – more than $3 billion from 2013 and 2017 alone – is smart at a time when state lawmakers are imposing budget cuts across most departments.

In January, state auditors found the tax credit was generating less economic impact than its backers suggested.

“The Georgia Department of Economic Development has used an inflated multiplier to calculate credit-related economic activity and has reported misleading job numbers. … the agency has also publicized the number of jobs supported by the film industry. However, many of the reported jobs are unrelated to the credit. The Motion Picture Association data used indicate that more than half of the Georgia jobs are in activities unrelated to film production, such as theater workers,” reads one report.

Another report found that millions of dollars in tax credits were improperly claimed for projects that did not originate in Georgia or for expenses that were not related to production.

“While the state has granted billions in credits, it does not have an adequate system of controls to prevent the improper granting of credits,” the report reads. “We found issues with the credit’s administration by the Departments of Revenue and Economic Development. The issues can be attributed to limited requirements and clarity in state law, inadequately designed procedures, insufficient resources, and/or agency interpretations of law that differ from our own.”

Despite the criticism that followed the state’s own audit findings, Ralston said what really matters are the people who benefit from the film industry in Georgia.

“We can argue about audits, we can argue about this, that and the other. What we cannot argue about is that thousands of Georgians are employed because of these productions,” he said.

Rick Harris, owner of Harris Diversified in Paulding County, said he’s one of those people. He started his generator and air conditioner rental business in 2003 with two air conditioner units. In 2007, he started working with location companies for movies and TV shows. He said he’s since been involved in over 400 film and television productions.

“We love the film industry,” he said. “It’s been a blessing to our company, our family,” Harris said. “Today we have over 200 air conditioners. We started out with one generator, about the time we got into the film industry, we may have had five or six. Now we have over 95 total.”

The audits suggest a need for tweaks, but the tax incentive has been great for the state, said Peter Stathopoulos, head of governmental affairs for Georgia Production Partnership, a group that promotes the Georgia entertainment industry,

“The audit pointed out some areas for tightening,” he said. “I think any program that’s grown so exponentially, as ours has, needs to make course adjustments, and I think the audit pointed out some areas that need tightening up, and that’s happening.”

Stathopoulos gave the example of House Bill 1037, which is supported by his group. That bill, authored by Marietta Republican Rep. Matt Dollar, would require all film projects to undergo audits. All but three of the 32 states with film tax incentives already require that, according to the state audit.

The keynote speaker for Film Day was Gov. Brian Kemp, who said Georgia’s benefit from the entertainment industry is more than financial.

“For many people, a movie may be their first Introduction to our great state,” Kemp said. “Years ago, it might have been the Atlanta skyline. Now it may be Graves Mountain in Lincolnton, Georgia or the Dillard House Stables in Rabun County, or perhaps downtown Glenville. People from around the world get to explore every corner of our state through this industry.”