The Subsidy Show Goes on in Georgia
States are following different scripts on the contentious issue of film subsidies. Michigan, Florida, Louisiana and Massachusetts are cutting back while Georgia continues to deal out major incentives to the industry.
Last week, Atlanta’s City Hall was the set for a new HBO film Confirmation highlighting the controversy around the nomination of Clarence Thomas to the U.S. Supreme Court. Given the industry’s ability to digitally transform any place to look like another, site selection for film productions has triggered a race to offer more lucrative benefits. Georgia now reimburses 30 percent.
Yet some states are thinking better of the practice.
On July 1st, a bill went into effect to cap film tax credits at $180 million per year, $91 million less than the recent annual average. The cap is a measure to help balance a $1.6 billion shortfall, spurred by lavish film tax credit spending, in the state’s budget in the next fiscal year. Critics of the tax cap—led by the Louisiana Film Entertainment Association, are furious, claiming thousands of jobs will be lost and the industry will move to competitor states with better incentive packages in place such as Georgia.
In a repeat of last year, Florida legislators decided not to extend the statewide film tax incentive program. The five-year, $300 million film incentive program was introduced in 2010, but due to high usage the program ran dry in 2013.
Five years after Michigan launched a $450 million film tax credit program in 2008, Michigan's film industry saw a 6% decrease in the number of jobs.The state handed out over $35 million to Warner Brothers to shoot just part of Batman v. Superman in-state. The state legislature voted to end the film tax credit program at the end of June. Gov. Snyder signed the bill last Friday.
Massachusetts is showing more concern for low-income residents than Hollywood by eliminating its film tax credit program to finance a higher earned income tax credit (EITC). Currently, for every $10 someone earns back on federal tax returns, Massachusetts gives that person an additional $1.50. In an effort to address income inequality, state legislators are in discussion about ways to increase the EITC rate from 15 percent to 30 percent. Gov. Charlie Baker suggested repealing the film tax credit in order to finance the difference.
There is endless debate on whether film subsidies provide significant benefits to state economies, but there's no question that meeting the high expectations of the movie industry is an expensive proposition. A growing number of states are deciding that those costs cannot be justified. It may be only a matter of time before Georgia follows suit.