The ripple effects of strikes by Hollywood writers and actors have reached Georgia, but just how far-reaching are they?
Will the strikes, for instance, influence the way state legislators think about Georgia’s film tax credit?
Georgia offers tax credits for many industries. The one for film, however, is perhaps the state’s best known. That film tax credit cost the state nearly $900 million last year. Staff at the Georgia Department of Economic and Community Development (GDEcD) say the investment paid off and contributed $4.4 billion to the state’s economy in fiscal year 2022.
A joint panel of state House and Senate members is currently reviewing the state’s various tax credit programs. Later this year, members will recommend what, if anything, to do about each of them. Sen. Chuck Hufstetler, R-Rome, co-chairs that panel.
“The film industry is a little less than half a percent of the Georgia economy, so the strike won’t have devastating effects as a whole,” Hufstetler said.
“But it will hurt quite a few individuals who make their livelihoods on it.”
Rep. Chuck Martin, R-Alpharetta, and Rep. Kasey Carpenter, R-Dalton, also serve on the Joint Tax Credit Review Panel.
Martin said many of Georgia’s TV and film productions are now delayed.
Carpenter, in addition to his duties on the Tax Credit Review Panel, also chairs the Creative Arts and Entertainment Committee. He said he and his colleagues may need up to two years to ascertain the strikes’ full impacts upon the Peach State.
CURRENT ECONOMIC IMPACT
Kelsey Moore is the executive director of the Georgia Screen Entertainment Coalition (GSEC). According to the GSEC’s website, that organization advises elected officials how their policies impact Georgia’s entertainment industry. GSEC members include some of the film industries’ support services staff, not to mention major movie studio personnel.
“Our Georgia stages and businesses have seen production activity slow to a trickle since the strikes,” Moore said via email.
According to the GDEcD’s website, among only a few of the productions that would be filming in Georgia now if not for the strikes are:
• Seven Little Johnstons for TLC
• Dish Nation for FOX
• First 48 for A&E
• Love and Hip Hop Atlanta for Viacom
• The Circle for Netflix
• Mama June for Wetv
GDEcD staff, who administer the film tax credits, declined to comment.
While Hufstetler said that TV and film make up less than half a percent of Georgia’s economy, Moore believes it’s one of the state’s major economic drivers.
“Tens of thousands of Georgians work in the industry, and more than 15,000 businesses served the industry directly as vendors last year. The halt in production will give Georgians increased insight into how the film industry is deeply integrated into our state’s economy,” Moore said.
“The pain goes far beyond the studios [and spreads] to Georgia businesses such as hotels, timber and lighting companies, caterers and clothing stores. We’re hearing from businesses that didn’t realize how much of their customer base was related to Georgia’s film industry. Businesses like antique shops and restaurants are now seeing significant decreases in revenue from the halt in production activity and spending.”
Hufstetler said it’s not as if UPS is on strike. The shipping giant only narrowly avoided a strike by reaching a last-minute agreement with the Teamsters union at the end of July.
“This is not a large industry that would have devastating effects,” Hufstetler said.
“It would only have a minor impact on the economy. The other 99.5% will keep going.”
THE FILM TAX CREDIT
To receive a tax credit, a production company must first spend at least $500,000 in Georgia and pay for an audit of those expenditures with a state-approved CPA firm. The company must then have that audit reviewed and approved by the Department of Revenue.
“It is often many months after the spending occurred that the credits are issued,” Moore said.
Rep. Mike Cheokas, R-Americus, does not serve on the Joint Tax Credit Review Panel. He does, however, serve on the House Creative Arts and Entertainment Committee. Cheokas said the film tax credits are “very limited and laser-focused.”
“[The recipients] do not get a cut on payroll taxes, or, if they reside in Georgia, any personal income taxes,” Cheokas said.
“There is no cut on sales tax, no cut on property tax, and if they buy a facility or a house they still have to pay those taxes.”
According to the GDEcD’s website, studio executives can apply that tax credit to 20% of a production’s qualified expenditures in Georgia. They may also earn a potential 10% Georgia Entertainment Promotion uplift by including an embedded Georgia logo on approved projects. This is why you will often see a little peach in the closing credits for programs filmed in the Peach state.
WILL THE STRIKES AFFECT THE REVIEW OF FILM TAX CREDITS?
As it pertains to the future of Georgia’s film tax credit, Hufstetler said he does not believe the strikes will affect whatever the Joint Tax Credit Review Panel recommends.
“This is likely a very short-term situation,” Hufstetler said.
“We are meeting each month, and we will review those maybe in October. I would think Hollywood would have this strike resolved by then.”
As reported by Vanity Fair, the longest writers’ strike on record was 1988 and lasted 154 days. As for actors, they went on strike in 1960, again in 1978-1979, then 1980, and again in 1986, according to USA Today. The longest of the strikes was in 1980. That strike lasted for 95 days.
Cheokas said Georgia should demonstrate utmost caution.
“If we mess with that [film tax credit] a lot, then Hollywood will leave,” Cheokas said, adding that other states that compete for Georgia’s business would likely pounce upon that opportunity.
“When I have a conversation with friends of mine who are counterparts in other states and I tell them that Georgia is the No. 1 feature film producer in the country they pull out their cell phones and Google that information to make sure it’s true.”
Carpenter, meanwhile, said the Hollywood strikes provide him and his colleagues “an opportunity to see what would happen in a world if the film tax credit didn’t exist.”
“From that standpoint, if you are playing football and one endzone is ‘Don’t change it at all,’ and the other is ‘Completely eliminate it,’ then you get to see what happens in both endzones as you try to make a measured decision to land on the 50,” Carpenter said.
The Georgia Film Office, which is part of the GDEcD, said Georgia hosted 412 productions between July 1, 2021, and June 30, 2022. These productions included 32 feature films, 36 independent films, 269 television and episodic productions, 42 commercials, and 33 music videos.
As they scrutinize the film tax credit, Carpenter said he and his colleagues will do nothing rash.
“We recognize the importance of making measured decisions,” Carpenter said.
“We will be wise in our decision making and not cause industry folks to lose their minds.”
