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Last
Updated: April 10, 2004 |
Home > 2004 Legislation
Final update... through our lobbyist's
efforts, we tried to attach HB 1775 to HB
709, which was
in a Conference Committee. On April 7, 2004,
the attachment also failed to reach approval of the Senate, effectively
killing the proposed entertainment industry incentive for the
2004 legislative session. A Senate spokesperson stated that Governor
Perdue is committed
to helping Georgia film, video, music & digital entertainment by appointing
a special Advisory
Commission to work closely with industry
professionals to develop a viable economic program for the state.
The officers and members of the Georgia Production
Partnership (GPP) and IATSE
Local 479, working jointly as Economic
Development through Georgia
Entertainment (EDGE), would like
to express their gratitude for everyone's hard
work & participation on behalf of the Bill. We are looking to the
future and the 2005 Georgia Legislative Session.
This FAQ is in response
to some very common questions about HB
1775, and gives a brief summary
and accounting of the EDGE Incentive Package:
HB 1775 will allow local, national and international producers of
qualified film, video and digital entertainment, commercials, industrial
films
and more (see the exact language in the Bill), whose "Georgia
spend" budgets
are in excess of $200,000 per annum,
the opportunity to claim an investment tax
credit against their Georgia tax liabilities in the
following increments:
- 10% of all Georgia Non-Labor Expenses
- An Additional 5% of all Georgia Non-Labor Expenses for Productions in Tier 1 & Tier 2 Georgia Counties (The State has Four Economic Tiered Levels, with Tier 4 Holding the Highest Rating)
- 15% of all Georgia Labor Expenses
One can more easily describe this tiered incentive system as 5-10-15. A production's "Georgia spend" should not be confused with a production's total budget, only that portion spent in Georgia.
Obviously, low-budget productions tend to hire more individuals from a local base than medium or high budget productions, but the incentive has been fairly
structured this way to help small independents, and this qualification
threshold is the lowest in the nation.
Essentially, this Bill gives producers the opportunity to claim
as much as 15% of all Georgia expenditures in the best case scenario, but it is more likely that an average tax credit scenario of 11-12% against the total Georgia budget will be realized, which is confirmed to be revenue
neutral by Georgia State University economic models and researchers.
Would we like to have better incentives? Absolutely! Louisiana is currently
the benchmark for stateside incentives. Their package gives a 10% investment
tax credit for productions with "Louisiana spends" of between $300,000
and $8 million, 15% credits for productions with budgets higher than
$8 million, plus an additional 20% tax credit for local labor. But
their package is quite severely revenue
negative (in the hopes of developing
a nonexistent market), and we could not hope to achieve that plateau
in Georgia during this troubling economic time.
Can this Bill make us competitive? Yes, because Louisiana must hire
most of its skilled and experienced resources and talent from out-of-state,
which may not qualify under their plan. But, even if production companies
are given credit for out-of-state hire and resources, the
cost of transportation, housing, per diem, etc., brings their true
savings down by as much as 5 to 10%. Therefore, we can be very competitive
because of our infrastructure, experience, and other important intangibles.
Further, if a production company does not have tax liabilities in the state, these tax
credits may be transferred or resold to third parties, either directly or through a broker, with some restrictions. As an example, if a company saves $500,000 on a production, but has less than $500,000 in tax liabilities, it may sell the difference to a Coca-Cola or a Home Depot, etc., each of whom have plenty of liability. Of course, it is reasonable to assume that the sale of such tax credits will not be dollar-for-dollar or at par, but rather at a discount, which will be determined by market conditions at that time. This may sound like a problem, but it is the common scenario for every state that either has or is developing a tax credit incentive solution, including Louisiana.
The EDGE tax credit plan will be retroactive to
January 1, 2004 (in the event that qualifying productions begin before the Bill is finalized and to help kick start a marketing campaign), and those credits may be used for annual tax filings or within any common withholding cycle. It is also important to know that the tax
credits may be spread out over a 10-year period.
Of course, there is other complicated language, but this is the heart of what we are trying to accomplish. It is important to note that by careful design our Bill is intended to create jobs for Georgians and Georgia's production goods and services companies first, while at the same time create economic opportunity for every county in the state. Together, we must stem the current tide of production attrition as, ultimately, an infrastructure cave-in will cost us our most important competitive asset.
For the record, Georgia
productions have fallen by over 70% in the two years since the U.S. state-to-state competitive imbalance began, and our labor pool has dropped by nearly 30%. Total film and television production has fallen from an all-time high in the early nineties of over 50 major state-wide projects per annum, to an average of under ten major projects per annum. And, Georgia has hosted only one feature film since the summer of 2003 (Strokes
of Genius: The Bobby Jones Story), with no major projects on the horizon. This is devastating information for our once proud community that ranked third nationally in production behind L.A. and N.Y.C., and just as problematic to the state's overall economic stability.
Some, who have other industry privatization agendas, have criticized the Bill as having placed too much power in the hands of the Georgia
Film, Video & Music Office. While it is true that the office will carry much of the burden of qualification and administration, the ultimate responsibility will be controlled by the GDITT and other statewide auditing mechanisms. Quite frankly, the checks and balances in this state-controlled tax process, which is responsible to all state taxpayers, is far more practical, and has far more safeguards than any private organization.
And, be certain of this... if we cannot get
this Bill passed soon, the downward spiral of our local business will continue
until such time that we may all have to leave the market in order to find
regular work of any value.
Thanks again for your support.
Ric Reitz
Co-President, GPP
Secretary/Treasurer, EDGE
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