New scrutiny will be applied to tax credits that relieve film companies from having to pay billions of dollars annually in Georgia under legislation that passed out of the General Assembly Friday.
House Bill 1037, by Rep. Matt Dollar, R-Marietta, would require all film productions located in Georgia to undergo mandatory audits by the Georgia Department of Revenue or third-party auditors picked by the state agency.
It would also tighten rules for how film companies could transfer or sell unused tax credits to other businesses, a common practice for production groups that conduct part of their movie-making work outside Georgia.
The Georgia Senate passed the measure by a 45-1 vote Thursday, with the state House of Representatives following suit on Friday by a 154-10 vote. The bill now heads to Gov. Brian Kemp’s desk for his signature.
Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, said the measure would help the state keep a closer eye on how lucrative tax credits are doled out.
“This is full auditing of all the film tax credits,” Hufstetler said Thursday. “Nothing more, nothing less.”
The measure’s passage comes after two scathing audits released in January that found the film tax credit program has been poorly managed while its financial impacts on the state economy were exaggerated.
Supporters of the credit point out it still brings huge economic benefits to the state despite the management shortcomings.
Backers include several local economists who have criticized on the audit findings, arguing the analysis ignored the impacts brought by billions of dollars and thousands of jobs that the industry generates in Georgia each year.
Those economic boons were enough to discourage state lawmakers from trying to curb or cap the film tax credit amid the coronavirus pandemic, which has pummeled the state budget.
Many lawmakers who favor closing tax loopholes over spending cuts to fix the budget were met with calls to keep hands off the film credit during the 2020 legislative session.
Still, the measure was pared back from its original version that proposed including more business operations under the credit program, including media coverage and broadcasts of large sporting events like the upcoming FIFA World Cup. That addition was yanked from the bill before final passage.