When she’s not fending off zombies, actress Lynn Collins likes to stroll the local farmer’s market in downtown Senoia where the hit television series The Walking Dead has filmed for the past decade.

A California resident, Collins has taken such a shine to the small-town terrain she’s thinking about making Georgia her new home, enticed by the cozy feel of Senoia, the state’s booming film activity and lower taxes than California.

“I’m definitely thinking about it,” Collins told a reporter on a recent Saturday morning in Senoia.

Actress Lynn Collins of The Walking Dead explores the Saturday farmer’s market in Senoia. (Credit: Alessandro Marazzi Sassoon for State Affairs)

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Hollywood studios and production companies have already set up shop in Georgia. Atlanta alone is host to some 1.8 million square feet of sound stage, eclipsing New York, and is now second only to Los Angeles.

Key to Georgia’s evolution into a hub for movies and TV shows is the state’s film-tax credit program, which has drawn film companies to the Peach State with policies that allow them to skip paying billions in taxes.

Nearly 300 movies and TV episodes were filmed in Georgia in the past year — a huge increase from the 65 movies and episodes shot right as the credit program came online in 2005. No other state besides California and New York attracts more local filming that Georgia.

The credit program appears to be working, but it’s also one of the largest tax incentives in Georgia by a long shot, bigger even than the budgets of many essential state agencies.

Critics say the costs of attracting film companies may be at the expense of state-funded services like health care and education, highlighting a recent state audit that estimated Georgia lost out on $602 million in tax revenues due to the credit in 2016 — far more than what film companies and crews paid in income and sales taxes while shooting their movies and shows.

Along with wiping out millions in potential tax revenues each year, according to critics, the credits have also become a moneymaker for out-of-state film companies that pay little in state income taxes and nab so many credits that they end up selling off troves of “unused” credits at a profit.

“What we’re really doing is boosting the profits of these out-of-state companies at the expense of things like health care and education,” said Danny Kanso, a senior policy analyst at the nonprofit Georgia Budget and Policy Institute (GBPI). “While we may want to build the film industry, there are other ways to do that than just this subsidy.”

Tourism companies show zombie fans where The Walking Dead was filmed in Senoia. (Credit: Alessandro Marazzi Sassoon for State Affairs)

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Supporters, however, have pushed back hard on that assessment, arguing that critics have low-balled estimates for how much local economic activity the film industry generates.

In reality, they say, movie and TV productions have pumped roughly $24 billion into Georgia since 2005 by spending money on sets, costumes, catering and extras, according to state Department of Economic Development estimates.

It’s a model that supporters believe yields more far dividends than losses, regardless of how much Georgia gives up in tax revenue. Proof, backers say, is in big-budget studios that have opened in Atlanta and the money spent in cities and towns statewide to make movies and shows.

Bottom line, without the tax credits, many studios may never have picked Georgia in the first place, choosing to film in other states that have strong incentive programs like Louisiana and North Carolina instead, supporters say.

“Georgia is very successful because there’s a market now (for filming),” said Van Stevenson, a senior vice president with the Motion Picture Association of America (MPAA). “It’s become a model across the country because of the business that the credit’s been able to attract.”

For this story, State Affairs investigated the scope of Georgia’s film tax credits – key aspects of which are shielded by state law – and probed arguments for and against the program’s size to help taxpayers understand what’s won and what’s lost in Georgia’s  “Hollywood of the South” incentive structure.

Costume and set pieces used to film The Vampire Diaries are on display at the welcome center in Covington. (Credit: Beau Evans for State Affairs)

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Tax Credits Take Flight

• Read our Explainer story, “What Makes Georgia’s Film Tax Credits Special,” for a deep dive on how the credit program works.

Georgia’s film tax credits work somewhat like gift cards.

Film companies rack up dollar amounts in credits from the state that can be applied to help pay what they owe in state taxes – depending on what productions spend locally to build sets, make costumes, book hotels and rent equipment.

Companies that spend $500,000 or more on those things can get 20% of that amount to pay taxes – similar to a $100,000 gift card in the case of a $500,000 production. Productions are also eligible for another 10% in credits just for putting Georgia’s official state logo in a movie or show’s end credits.

Since 2005, film companies have used more than $4.1 billion in tax credits they’ve received from the state – and likely more than that, since tax-accounting records from the state Department of Revenue are still incomplete for the last two years.

Georgia has issued billions of dollars in tax credits for film productions since 2005 when the incentive began. (Credit: Brittney Phan for State Affairs)

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Where Georgia differs from a gift-card system is that film credits can also be sold to any local resident or business to help pay down their own tax bills.

From 2016 to mid-2021, film companies sold nearly $2.9 billion of the credits they received, rounding out to roughly half the amount of credits that were actually used to pay taxes, according to state revenue data.

At the same time, those companies have also been carrying over big portions of their credits that they don’t apply to their own tax bills in a given year, state revenue records show.

In 2019, for example, productions used about $748 million-worth of credits they received that year, but also carried over more than $1.3 billion in unused credits into the next year.

It’s these aspects of the credit program – sales and carryover – that rub critics the wrong way.

“The companies are simply not doing enough economic activity to owe much in taxes,” said Kanso of the GBPI. “That’s why they’re selling [credits] to others in Georgia so that they can make a profit.”

But for every detractor of the program, there are many more advocates who sing the credits’ praises within the halls of the State Capitol, local governments, economic-development offices and the quaint streets of places like Senoia.

A vintage car on display in the streets of downtown Senoia where The Walking Dead was filmed. (Credit: Alessandro Marazzi Sassoon for State Affairs)

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Zombies, Vampires and Dollars

Like many Georgia towns that host popular shows, Senoia has built up a solid tourism industry from fans eager to see first-hand where the show’s heroes fight for survival in a zombie apocalypse.

Teens in zombie makeup and tour guides roam a downtown district dotted with newly built shops, restaurants and day spas – evidence of the influx of Hollywood money. At the Saturday market, aspiring actor Hudson Meeks said he views the zombie show as a blessing.

“There’s no doubt: none of this would be here if it weren’t for The Walking Dead,” said Meeks, who works on his family’s nearby farm and bed-and-breakfast and mans a stall at the Saturday farmer’s market.

Senoia Mayor Dub Pearman has watched his town flourish since The Walking Dead started filming about a decade ago, transforming from a sleepy Main Street to a destination spot with a bustling farmer’s market and a downtown area that’s “almost developed-out.”

“The incentives that the state has for bringing the film industry here are fabulous,” Pearman said. “We’ve got a pretty good thing going here.”

Brick buildings and shops line the streets of downtown Senoia where scenes from The Walking Dead were shot. (Credit: Alessandro Marazzi Sassoon for State Affairs)

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The burst in big spending by movie and TV crews in places like Senoia have long fueled arguments from the credit program’s backers that economic gains far outweigh any potential tax revenues that the state gives up.

Local movie and TV spending has exploded since 2005, rising from an estimated $155 million spent that year to more than $2 billion annually in recent years, according to state economic-development officials.

That spending figure shot up to $4 billion in local spending this past fiscal year, notching the highest total on record, despite the COVID-19 pandemic. That rounded out to more money than Georgia spent on any of its state-funded services except public schools.

Big-budget film spending has trickled down to localities like Covington, the seat of rustic Newton County that has drawn many movies and TV shows over the years including the widely popular series, The Vampire Diaries.

College students Lawrence Bayer and Maddie Govea visit Covington on a trip from El Paso, Texas, to see where The Vampire Diaries was filmed. (Credit: Alessandro Marazzi Sassoon for State Affairs)

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Vampire faithful from across the world trek to the cafes, restaurants, bars and clocktower where the show filmed, including college students Lawrence Bayer and Maddie Govea, who recently planned a five-day trip from El Paso, Texas, around visiting Covington.

“She’s a really big fan,” Bayer said of his girlfriend, Govea. “She was like, ‘Here’s the tour, website and stuff.’ So I just got everything.”

Film-inspired tourism now ranks among Covington’s top industries, said Ron Carter, who runs the local welcome center. Covington officials estimate tourism spurred more than $152 million in tax revenues in 2019, translating to $314 in property-tax relief for each household that year.

“The tax credits enhanced what was already going on here,” Carter said. “If Georgia doesn’t have that tax credit in place, The Vampire Diaries wouldn’t have called.”

Ron Carter runs the welcome center in Covington where many movies and TV shows like The Vampire Diaries were filmed. (Credit: Beau Evans for State Affairs)

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Critics Question Costs

Amid the rosy picture, Georgia’s film credits have faced stiff criticism from some local tax analysts and economics experts, including a pair of harsh reports from the state’s own internal auditing department.

Last year, state auditors questioned whether economic-development officials had inflated the film industry’s spending impacts by several billion dollars – a charge that drew swift backlash from the credit’s supporters who said the estimates were accurate.

J.C. Bradbury, an economics professor at Kennesaw State University, has also slammed the state’s film-related economic estimates, calling the motion-picture business in Georgia “a very small part of the economy.”

“It’s very, very expensive,” said Bradbury, who authored a study criticizing the state’s estimates for 2018 and calculating the credit program’s cost to each taxpaying household at $220 per year. “There have been no peer-reviewed studies that indicate there is any [economic] benefit from this.”

See the flow of film tax credits in a given fiscal year. (Credit: Brittney Phan for State Affairs.)

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Critics frequently point to the amount of tax revenues Georgia never collects due to the credits as a reason for reining in the incentive program’s scope.

Film credits potentially ate up roughly $1 billion that Georgia may have generated in tax revenues during the 2020 fiscal year, rounding out to about 3% of the state’s total budget, according to the state’s most recent annual tax expenditure report.

“As the evidence demonstrates, the state did perform well on attracting the (film) industry and creating jobs,” said a study published last year by Augusta University researchers. “However, the cost of the program raises questions about return on investment, which is relatively low, and the sustainability of a high-cost program.”

Even the number of jobs created by the film industry is contested. The MPAA in 2018 claimed some 92,000 jobs were created locally by productions, but the Augusta University researchers put that number closer to 15,000 in 2017, citing federal labor figures. In a 2019 policy brief, Bradbury estimated a more “realistic” number was around 32,000 jobs. 

Local workers in Georgia and those from other states make up different shares of jobs and wages involved in credit-receiving film productions. (Credit: Georgia Department of Audits and Accounting)

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The credit program’s supporters have countered that it’s impossible to measure how much the state actually loses in tax revenues from the credits, given many film companies may never have picked Georgia in the first place without the incentive.

No one is calling for an outright end to the credit program, Bradbury said, noting the local presence of major studios such as Tyler Perry Studios and the U.K.-based Pinewood Studios as signs of the film industry’s permanent impacts.

Rather, critics have pushed for more sunshine on the credit program to better understand its scope, echoing claims from state auditors last year who found lax oversight on what kinds of spending by film companies end up qualifying for credits.

Those findings prompted state lawmakers to pass a bill last year requiring that all credits be audited for accuracy over the next few years, rather than just a portion, as was previously the practice.

Prior to 2021, Georgia was one of only three states that did not require audits for individual film credit applications. State lawmakers changed this policy in mid-2020 to require audits. (Credit: Georgia Department of Audits and Accounts)

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While that bill aimed to boost transparency, it’s still difficult to track results of film-credit audits. State revenue officials denied State Affairs’ request to review individual credit audits conducted so far this year, citing state law that bars public disclosure of tax-related documents.

Similarly, public records on who is awarded credits, in what quantity and who buys and sells them are also withheld on confidentiality grounds.

“The amount of information they’re able to withhold is really unfortunate,” said the GBPI’s Kanso. “It’s one of the contributors against giving Georgians the facts to make a decision.”

State lawmakers celebrate wrapping up the 2021 legislative session in the Georgia Senate by tossing bill copies in the air. (Credit: Beau Evans for State Affairs)

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The Market of Film Credits

On top of transparency concerns, critics have homed in on the ability of film companies to sell credits as too much of a giveaway for Georgia to stomach.

Anyone in Georgia can buy film credits – typically for 80 to 90 cents on the dollar – to help offset their own annual income taxes, regardless of whether they had anything to do with a movie or show’s creation, according to several local accounting firms.

The market for buying and selling film tax credits is huge in Georgia, according to Peter Stathopoulos, a tax consultant and partner at the Atlanta-based firm Bennett Thrasher that helps clients buy credits.

It’s a major reason why many big studios find Georgia so enticing as one of the only states that offers transferable credits, Stathopoulos said. 

If the tax credit were “purely an income tax credit, it would not have been that useful to companies coming into Georgia to make new investments in the state that did not have pre-existing income tax liabilities in the state,” Stathopoulos said.

Unlike other states that offer rebates to film companies instead of sellable credits, Stathopoulos said, “Georgia doesn’t have to cut a check for the incentive.”

Georgia is among several states that offer tax credits for film productions instead of rebates or grants. (Credit: Georgia Department of Audits and Accounts)

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Critics don’t view it that way. For Bradbury and others, selling Georgia’s credits makes for a practice that’s not usually allowed with federal tax credits, resulting in a lopsided win for film companies over the state when factoring in the loss of tax revenues.

“Most film companies don’t owe any taxes in Georgia, so that tax credit itself is useless to them,” Bradbury said. “Where it becomes valuable is that they can sell it to someone else.”

Along with brokering credit sales, some accounting firms including Bennett Thrasher also help state revenue officials audit individual tax credit applications for accuracy, records show.

Stathopoulos also said he’s helped draft state legislation on the credits, and he currently holds a top position in a film-industry advocacy group called the Georgia Production Partnership.

Peter Stathopoulos is a tax consultant and partner at the Atlanta-based firm Bennett Thrasher. (Credit: Peter Stathopoulos)

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Some critics like Bradbury see the close ties between auditors, accountants and lawmakers as akin to “the fox guarding the henhouse” – and ripe for reform.

“The problem with the program isn’t that it’s abused and some illegal purchases are made,” Bradbury said. “The problem is that everything is totally legal. Almost every expenditure is qualified.”

For his part, Stathopoulos said his firm follows the letter of state law when it comes to keeping conflicts-of-interest out of credit sales, credit audits and his advocacy work.

“States make certain choices about which businesses they want in their state and which ones they want to pay for,” Stathopolous said. “I’m personally glad that this state chose [the film industry].”

Makeup artists prepare actress Jennifer Hudson to go on camera for the movie “Respect” filmed in Atlanta. (Credit: Georgia Department of Economic Development)

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The Land of Make-Believe

Amid a backdrop of debate over the film credits, state lawmakers have shown little appetite in recent years to pass any broad changes to the program. 

Even Rep. Matt Dollar (R-Marietta), who sponsored last year’s bill on credit audits, has heaped praise on the program. He accepted a “Friend of the Film” award from the Georgia Screen Entertainment Coalition last October – four months after his bill cleared the General Assembly.

“Certain critics want to consider repealing the incentives that have helped create these much-needed jobs,” Dollar said in a statement accepting the award. “This shortsighted plan would be devastating to thousands of families and businesses in our district.”

Instead of repeal, many critics have called for regulating credit sales and capping the overall amount of credits that film companies can secure annually. Incentives should also be retooled to benefit more film companies that reside in Georgia, rather than mostly those flying in from Hollywood, said the GBPI’s Kanso.

“We really don’t do this for any other industry,” Kanso said. “If we did, you could imagine what that would do to state revenues if we adopted this model on a larger scale.”

Tourism is a booming business in Covington largely thanks to movies and TV shows filmed locally like The Vampire Diaries. (Credit: Beau Evans for State Affairs)

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Meanwhile, tax-credit supporters want to see state lawmakers keep their hands off the program as much as possible, worried about driving away film productions to other states that also have strong film incentives like North Carolina or Louisiana.

Shrinking the film credits could also hurt local businesses like contractors, hardware suppliers and restaurants that lean on the film industry for work, said Tom Cunningham, the late former chief economist at the Metro Atlanta Chamber of Commerce.

“Simply put, removing or weakening the credit would lead to job losses, business closures and layoffs,” Cunningham said in a report last year. “These things would then lead to a reduction in state and local tax revenues.”

In Senoia, Pearman has gotten used to strangers knocking on his door at odd hours, asking where to find zombies. With his town looking healthy, and a local studio nearby that’s ready to pick up the slack when The Walking Dead ends, the mayor’s keen to keep the tax credits just as they are.

“Personally, I wish they’d leave it alone,” Pearman said. “The land of make-believe, they’re always going to be needing places like ours.”

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What else would you like to know about tax incentives in Georgia? Share your thoughts/tips by emailing [email protected] or [email protected].