Giving away tax incentives for film, television is gift that keeps on giving

By Maria Saporta

What a difference an incentive makes.

That was the bottom line of Monday’s Rotary Club of Atlanta’s program on the “Business of Entertainment in Georgia “ — with a special focus on the state’s burgeoning film, video and television industry.

Consider this.

During the 2007 fiscal year, the economic impact of the film, television and interactive entertainment industries was $242 million. In fiscal year 2013, that economic impact has grown more than ten-fold to $3.5 billion.

Virtually all that growth can be traced back to the passage of House Bill 100, which was signed into law by then Gov. Sonny Perdue in 2008, offering attractive tax incentives to film, television and entertainment projects shot, produced or built in Georgia.

Lee Thomas, director of the Georgia Film, Music & Digital Entertainment Office — a division of the Georgia Department of Economic Development, said the real impetus to pass that bill occurred when Georgia lost the film project “Ray” — the movie about Ray Charles, the singer who turned the song “Georgia on my Mind” into our state song — to Louisiana.

Thomas said that since 2008, more than 70 entertainment industry companies have located in Georgia, and there have been 11 soundstage announcements. As Georgia’s physical infrastructure has grown, so has its skilled labor. According to Thomas, Georgia can provide crews for up to 10 to 11 projects simultaneously.

(Full disclosure: my son is breaking into the business — having worked on three major movie projects, following in the footsteps of his father).

According to the panel speaking to Rotary, one of the biggest positive impacts that the incentive has had is in promoting the Georgia brand. Projects that showcase the Georgia “Peach” — showing that they were shot in the state — get the maximum tax break. Also, several projects have become cult favorites — attracting tourists who want to see the places where the movies or television series were shot — think “Hunger Games” or “Walking Dead.”

It is hard to quantify the economic impact of the ripple effect over decades when people identify a place with a movie or show.

Think “Fried Green Tomatoes,” “Deliverance,” “Forrest Gump,” “Midnight in the Garden of Good and Evil,: “The Internship” (Georgia Tech’s Clough student center being turned into Google’s headquarters)…

Ric Reitz, an actor, writer, composer, director and producer who was a key architect in the development of Georgia’s current entertainment tax incentive law and a co-author of the industry’s 2020 business plan, said the message being sent around the world is: “Made in Georgia.”

After New York, Los Angeles and perhaps Chicago, Georgia is “fertile ground” to become “the next great American media center.”

Reitz went on to describe all the assets that are already here — Crawford Media Services, the post production facilities founded by Jesse Crawford; all the cable stations that were originally founded by Ted Turner; Tyler Perry and his partnership with Oprah Winfrey, Pinewood Studios in Fayette County, EUE Screen Gems Studios at Lakewood; Jim Jacoby’s plans for a 400,000 square foot studio in Gwinnett County, among others.

“We can be the third largest media center in America,” said Reitz, adding that the Atlanta region already has an extensive fiber optic network and Georgia Tech’s research capabilities — “things upon we can build. We can build out our communications infrastructure. I call it Media 3. But the infrastructure component involves investment.”

Wilbur Fitzgerald, an actor who has appeared in more than 100 movies and television episodes, also was instrumental in getting the tax incentive passed.

He said that Gov. Perdue understood the significance of this tax  incentive when he asked rhetorically about the Georgia “Peach” logo — “What if this logo had been on ‘Gone With The Wind.’” Ironically not a single scene of the movie that put Georgia on the map internationally was shot in the Peach state.

Now Fitzgerald believes that Pinewood Studios “will be a game changer.” The U.K. studio that produces James Bond movies and Harry Potter films is making a long term investment in Fayette County, an indication that the industry is putting its stake in the Georgia soil.

So is the tax incentive safe?

Reitz said that unlike North Carolina, Georgia’s tax incentive for the film, television and entertainment industry does not have a sunset (N.C. expires in 2014). “Our current governor is extremely supportive,” Reitz said.

Fitzgerald said that studios often make plans 12 to 18 months in advance, so they want to make sure they can count on the current tax incentives still being there down the road.

“Television shows, they want to feel good about the stability,” he said.

It also helps when movies and television shows are shot outside of metro Atlanta because communities all over the state end up benefiting from the incentive.

As he said: “This is a statewide industry.”

Reitz said that’s yet one more reason why Georgia needs to be as strategic as it can be to build out the industry and the communications infrastructure in metro Atlanta so it can better compete with the powerhouses in Los Angeles and New York.

“We have to more national media conglomerates here,” Reitz said. “We need to at least have their regional headquarters — Sony, Paramount, Viacom.”

Then, he seemed to debate himself, saying that those companies do like to be close to money centers, like Wall Street. Of course the new owner of the New York Stock Exchange is Atlanta’s own IntercontinentalExchange (ICE). Atlanta also has emerged a center for mobile communications, internet security and credit card processing.

Who knows what the future will bring — and what kind of synergies can emerge by becoming a top three media center.

But what we do know that when it comes to the film, television and entertainment industries — tax incentives have definitely made a difference in Georgia.

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

12 replies
  1. RenaMoretti says:

    That’s the oldest nonsense in the book.
    You only count the “good” impact and conveniently “forget” to account for the taxpayers paying more taxes so Hollywood producers can get money for their projects and other State priorities that go unfunded so the giveaway to Hollywood can be funded.

    It’s just so ridiculous, it wold be laughable if people weren’t actually hurt with higher taxes and fewer economic opportunities every time government decides to hand out money to a favored industry.Report

    Reply
  2. Ken Bleakly says:

    The entertainment tax is a no brainer,  They are only getting a “break” on part of the taxes that they otherwise would not be paying in Georgia, because they would be producing their shows elsewhere.  In addition, they are stimulating spending on food, materials, building supplies, electrical equipment, rentals and many other purchases that are fully taxed.  This is one of the best economic boosts to our economy we could have had during the Great Recession.  We have also been expanding our intellectual capital in terms of the thousands of workers who now have skills in demand in a growing global industry.  Thank you Gov. Perdue and the legislature for seeing the wisdom of this strategy.Report

    Reply
  3. Adrian44 says:

    Ken Bleakly the production companies literally do not owe or pay income taxes in Georgia.  It’s why they sell the credits for cash to wealthy Georgia residents or companies that do pay taxes and that now get to avoid paying the state anything by using purchased film credits instead.  
    The 30% “tax credit” for a movie or show doesn’t function as a “tax break”….it literally represents cash for 30% of everything they spend in Georgia.  If Hunger Games 2 pays Jennifer Lawrence $10 million, the taxpayers are covering $3 million of her salary.Report

    Reply
  4. RenaMoretti says:

    Adrian44  Exactly.  It is a handout from taxpayers to producers and stars (and a little bit to workers).
    States think it makes them “cool” to have movies but feel compelled to pretend they’re doing it for the economy…Report

    Reply
  5. RenaMoretti says:

    Ken Bleakly Where do you see film as a “growing global industry”.  It’s a very mature industry that is losing ground secularly (although a lot of the current unreported by the press crisis is caused by making crappy product).
    When you give money to Hollywood producers you don’t build anything.  Stop giving them money and you have a bunch of workers with “intellectual capital” and “skills” who are unemployable…Report

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  6. Craig Miller says:

    The Georgia Film Incentive has delivered more than $3.5 Billion to the Georgia economy in the last year.  It brings to Georgia production that otherwise would be shooting elsewhere.  But the key benefit to Georgians is the number of businesses that are employed supporting the industry.  Just to talk to business owners in the lumber, hotel, catering, interior design, transportation, real estate, tourism  and construction industries that have benefited from the films shooting in Georgia.  Also look at the new infrastructure that is being built to support the ever growing production:  EUE Screen Gems Studios, Raleigh Studios, Pinewood Studios, the new Jacoby studio project and more are coming.Report

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  7. RenaMoretti says:

    Craig Miller  The problem with that number is that it is literally picked from a hat (size XL).  OK, not literally, but there is no way to do an econometric study that will really tell you what’s going on (there’s econometric studies that I think are right, but there’s so many assumptions, you’d read them and think they’re wrong…)
     The problem with all that infrastructure etc… is this:  When you cut off the taxpayer money spigot, will they still come?  Canada has been saying for years “we’re building for the future” but still hasn’t dared take out its huge subsidies.  The reason?  There are very few projects you’d shoot in Canada without the subsidies, so for that industry (of US project coming to Toronto etc… to shoot) you have to keep handing out taxpayer money.

    Similarly, the moment Georgia stops handing out money, productions will stay away, shooting stages or not.

    Finally, what those “studies” don’t take into account is that taxpayers, had they kept that money, would have spent and invested it.  Lumber would have been bought, interior design done, etc… but not by rich movie producers.

    That loss is never accounted for by those insisting that Government handouts create economic growth (even though the whole post-war era shows it doesn’t, unfortunately because it’d be easy to solve our economic problems if it did.)Report

    Reply
  8. CalvinS says:

    The article fails to mention that for every job “created”, there was a job “destroyed”. The article doesn’t discuss the negative impact on the THOUSANDS of people in California who lost their jobs, and sometimes their homes, because of the tax incentives and film credits of places like Louisiana, NC, and Georgia. So, when you smile at your son for following your footsteps into the business, remember that somebody else’s soon is going hungry in California.Report

    Reply
  9. BIG EYE says:

    RenaMoretti CalvinS 
    Film incentives are no different than a subsidy to build a car plant, a carpet mill, A football or Baseball stadium.  The only differance is that Movies are a high profile business with expensive projects that don’t always make money.  Incentives have been used in almost every industry for decades.  Movies are the latest and last to share in incentives.Report

    Reply

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