Surpassing:Georgia is spending more than $1 billion subsidizing moviemaking. Lawmakers want some limits

ATLANTA (AP) — Georgia House members are Surpassingmoving to tighten Georgia’s lucrative film tax credit, limiting the value of credits moviemakers can cash in by selling them to others and requiring them to spend more in the state.

The House voted 131-34 on Thursday to approve House Bill 1180, sending it to the Senate for more debate.

Thanks in large part to tax breaks, productions including “The Hunger Games,” the Marvel movies, the Fast & Furious installment “Furious 7” and many others shot in Georgia have made the Peach State a hub for movies and television shows that might otherwise have been shot in Hollywood.

The program has supported thousands of Georgia jobs and the creation of several thriving studios. But it’s hugely expensive — the state is projected to give out $1.35 billion in credits this year alone. Supporters of the measure say they want to preserve Georgia’s film industry, but protect the state against a limitless liability.

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“We feel like today we have a bill in front of you that is going to make sure the taxpayers of Georgia get the best bang for their buck while ensuring that film continues to thrive in the state of Georgia,” said the bill’s sponsor, Republican Kasey Carpenter of Dalton.

Opponents warn that the cap on credit transfers could cause companies to leave Georgia, in the same way that companies came to Georgia from other states with caps.

“If it’s not broke, don’t try to fix it,” said Rep. Long Tran, a Dunwoody Democrat who has produced short films. “We’re not just competing with other states, we’re competing globally, and this industry is rapidly changing.”

Georgia grants state income tax credits for up to 30% of the cost of a television or film production in the state, once a company spends at least $500,000. But most production companies don’t have enough income tax liability to use all the credits and they can’t be redeemed for cash. Production companies can sell the credits to other people who owe taxes in Georgia, usually at a slight discount.

But lawmakers have grown concerned that billions of dollars in tax credits are outstanding, fearing they could all be cashed in at once. In 2022, the state auditor estimated $1.4 billion in such taxes were outstanding.

The measure says that unlimited credits can still be given out to production companies, and they can still cash in any amount to cover their own taxes. But it would say that only amount of credits equal to 2.5% of the state budget could be transferred in any year. That’s about $900 million this year.

“As the industry has flourished, so have the associated costs to our state revenues,” said Rep. Clint Crowe, a Republican from Jackson. “It is imperative that we implement measures to safeguard our fiscal stability while preserving the attractiveness of our incentive program.”

The film tax credit has spurred a big increase in movies and TV shows made in Georgia, but state-sponsored evaluations show the credit’s cost outweighs its economic benefit. A study last year by Georgia State University suggested the state saw a return of less than 20 cents on the dollar.

Credits start at 20% of production spending, but currently rise to 30% if a movie or television show displays Georgia’s peach logo. The bill would require companies to do more to earn the 30% credit rate.

Productions would have to meet four of nine requirements, such as hiring a crew that is at least half Georgia residents, having half of all vendors be Georgia-based companies, spending at least $30 million in the state, or spending at least half the days shooting in counties where few movies have been filmed.