ATLANTA – Maintaining a reliable Georgia film tax credit is essential to continuing the success story the state’s film industry has built, an administrator with the Georgia Department of Economic Development said Wednesday.

Andrew Capezzuto, the agency’s general counsel, put up a robust defense of the state’s film tax credit during the opening hearing of a new joint legislative panel formed to review all of Georgia’s income tax credits and sales tax exemptions. The goal is to determine which are bringing state taxpayers a healthy return on their investment and which might need to be reformed or repealed.

Georgia’s film industry has exploded from $135 million in direct economic impact in fiscal 2007, the year before the General Assembly adopted the nation’s richest film tax credit, to $4.4 billion last year, Capezzuto told members of the Joint Tax Review Panel.

The Peach State now boasts more than 6 million square feet of film stages, up from fewer than 50,000 square feet before the tax credit was enacted and second in the U.S. only to California, he said.

Capezzuto said much of that activity is taking place outside of metro Atlanta, including studio projects in Savannah, Columbus, and Athens. Nearly 1,000 film productions have been staged outside of the metro region since 2007, he said.

With the film tax credit accounting for about $1 billion in lost state tax revenue each year, lawmakers have put in guardrails aimed at ensuring accountability. Legislation the General Assembly enacted in 2020 requires all film productions located in Georgia to undergo mandatory audits.

It also tightens rules governing how film companies 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.

“We don’t just give away tax incentives without getting something in return,” Capezzuto said.

Jeffrey Dorfman, the state’s chief economist, injected a note of caution that was aimed at the state’s tax incentives in general but seemed to apply particularly to the film tax credit.

Dorfman suggested tax credits be used sparingly to jump-start targeted industries. Once established, industries may not need tax credits going forward, he said.

“Once you have built a position of leadership, you can reduce the incentives,” he said.

But Capezzuto cautioned against making significant changes to the film tax credit.

“To be able to rely on incentives that are predictable is very important for us to remain competitive,” he said.

Senate Appropriations Committee Chairman Blake Tillery, R-Vidalia, a member of the review committee, said he’s looking to the panel to “clean up” rather than eliminate tax credits or exemptions.

“I don’t think anybody’s out to end a certain credit,” he said.

After taking July off, the review panel will begin meeting once a month in August. It is due to recommend any potential changes to the state’s tax incentives in time for the 2024 legislative session starting in January.