In 2017, West Virginia did away with its film tax credit. At the time, the film credit, issued by the Film Office, was the domain of the Tourism Office, under the umbrella of the Department of Commerce. The DoC audited the film tax credit program and found it wasn’t beneficial the state, so it and the whole program were abolished.
Over the years, several attempts have been made to resurrect the film tax credit, and we hope this year, it succeeds. With the rise of streaming platforms producing their own content, this is the perfect time to reopen the state to the film industry. Production will bring an influx of dollars to West Virginia towns and create in-state opportunities for West Virginia artists.
One of the downfalls of the original program — as revealed by the audit — was almost half the “direct production expenditure” companies spent was to pay out-of-state workers. In addition, over its 10-year existence, the Film Office brought in less than $1 million a year. The report also highlights a number of questionable policies and write-offs that contributed to the Film Office’s failure.
All that said, SB 51 seeks to reinstate (and reform) the film tax credit. As part of its reformation, it will be handled by the Department of Economic Development instead of Tourism. The bill also makes clear that a qualifying “direct production expenditure” is “a transaction that occurs in the State of West Virginia or with a West Virginia vendor.” The development office will also have the discretion to deny the tax credits to productions that negatively portray the Mountain State. There are a number of reforms suggested in SB 51 that address the shortfalls of the original film tax credit program.
Anyone who bothers to watch film credits will notice that quite a few shows and movies feature the Georgia peach at the end; that’s because the state has been offering an exceptionally generous film tax credit since 2016. Georgia’s up-to-30% credit cost the state $1.2 billion in 2021, but the film industry spent around $4 billion in Georgia in 2020. That said, Georgia’s unlimited credit has drawn much criticism from its taxpayers. West Virginia’s up-to-31% tax credit (27% base credit, which is higher than Georgia’s) smartly caps at $10 million for now.
The other advantage of the proposed West Virginia credit is it applies to projects that spend a total of $50,000, and small projects from the same production company can be combined to reach the qualifying amount. This could encourage film companies to try out our beautiful state for a pilot episode or a miniseries as well as attract up-and-coming filmmakers starting with a smaller budget.
It would be wise for our Legislature to implement the program now and run an audit in a few years. At that time, lawmakers can see if the new measures are successful and if the cap needs to remain as is, be increased or be decreased to find that sweet spot of attracting business without costing more revenue than it brings in.
We believe TV and film producers will come to realize the “wild and wonderful” beauty of the Mountain State far surpasses Georgia’s — we just need to get them here first.
