Election Outcome Won’t Hurt Georgia Film Production Tax Credits, No Matter What Happens
On Tuesday, the state government in Georgia could get shaken up, with all 236 of its Senate and House seats up for election. For the film industry, the possibility of a newly constituted Statehouse raises the question: What changes could be in store for Georgia’s entertainment tax credit program, which handed out $870 million in subsidies in 2019?
Since the program was introduced in 2008, Georgia has grown from a state that hosted a smattering of productions into a full-fledged “Hollywood of the South.” Even amid the pandemic, the state reported that 234 movies and TV shows filmed there during the 2020 fiscal year. The 30 percent tax credit, unlike in other states, is uncapped and covers above-the-line costs, making it a wildly attractive place to shoot big-budget projects like the $356 million “Avengers: Endgame” and $8-million-per-episode “Stranger Things.”
Just like states across the country, Georgia is grappling with a pandemic-recession hit to its finances: The budget for the current fiscal year, approved in June, forced most state agencies to take a 10 percent hit. The largely popular film tax credit program, however, is virtually a non-factor during the election.
One reason? Georgians have other political issues on their mind.
“It’s the presidential election and the two senate elections that are grabbing all the attention,” Trey Hood, a professor of political science at the University of Georgia, told IndieWire. “It sucked all the oxygen out of the room for everything else.”
While Georgia hasn’t voted for a Democratic presidential candidate since 1992, many prognosticators have pinned Georgia as a battleground in the race between President Donald Trump and Joe Biden. On top of that, both of the state’s US Senate seats are up for election, contests that have attracted national attention an influx of out-of-state cash.
Indeed, across the 20 most closely watched legislative races singled-out by The Atlanta Journal-Constitution, IndieWire identified only a few where candidates have even discussed the tax credit.
For example, Rep. Josh McLaurin, a Democrat representing Georgia’s northern suburbs, was reportedly critical of the tax credits amid the state’s most recent round of cuts. His opponent, Republican Alex Kaufman, doesn’t even broach the topic in his campaign materials.
In a district closer south to Atlanta, incumbent Democrat Betsy Holland, a WarnerMedia VP, painted herself as an “active part of this success story” on her website during her 2018 campaign. But neither her nor her opponent, Republican Lyndsey Rudder, address the matter in their online campaign presences this year.
Even Acworth Republican Rep. Ed Setzler, who points out on his website that he has fought against “corporate cronyism,” makes sure to note that he supported the bill that created the tax credit program, which “transformed Georgia into the number one producer of feature films in the world – ahead of California and New York, creating literally thousands of well-paying jobs in the movie industry.”
The fact that the tax credit program has not been a campaign issue comes after reforms signed into law by Gov. Brian Kemp, a Republican, in August. A state review of the program in January found millions in ineligible expenditures by production companies and that the state lacked an adequate oversight system. Though lawmakers considered caps or other reforms, the bill that arrived on Kemp’s desk in August kept the uncapped system while requiring productions to undergo mandatory audits while tweaking some other rules.
“It’s barely a political issue,” said J.C. Bradbury, a professor of economics at Kennesaw State University. “I think partly because it’s become so entrenched in Georgia.”
Bradbury is a particularly vocal critic of the program. An op-ed he wrote for The Atlanta Journal-Constitution in February calls into question the structure of the program, which allows credits to be bought and sold, while pointing to a study in the Journal of Economic Geography that found Georgia got a negative return on investment for its use of taxpayer funds.
That challenges an earlier finding from the state that the film industry had a $9.5 billion impact on the state’s economy in 2018. The state review in January, which preceded reforms, found the tax credit had a net impact of less than $3 billion and fewer than 10,000 jobs in 2016, the last year they studied.
Regardless, the exact fiscal benefit of the program is disputed. And the complexity of the program means for many Georgians, jobs and location shoots serve as a firsthand, if imperfect, testament to its success.
Another factor in the program’s recent history is how the industry has helped Georgia get back to work after the initial pandemic lockdown. In June, Kemp and the Motion Picture Association announced that as part of reopening, studios and streamers would invest $2 billion into the economy over the following 18 months and hire approximately 40,000 workers. While it’s possible the program will be reevaluated after the dust settles from Tuesday’s election, one thing is clear: Filmmaking is now nearly as Georgian as peach cobbler.
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