Could Wisconsin become next big film production hub with Senate Bill 1026?

Wisconsin’s Senate Bill 1026, introduced on February 13, 2024, by a bipartisan group of senators and representatives, marks a significant legislative effort to invigorate the state’s film production industry through tax credits. This initiative could have far-reaching implications for Wisconsin’s economy, potentially leading to job creation, increased spending in local communities, and a diversified economic base. 

Wisconsin is one of only five states without a dedicated film office and is among ten states that do not offer any production incentives. This lack of support infrastructure and financial incentives has placed Wisconsin at a competitive disadvantage in the film production industry. Senate Bill 1026 aims to change this by establishing a State Film Office and introducing a series of tax credits to attract film production companies to the state.

Key Components of Senate Bill 1026

The bill proposes income and franchise tax credits for film production companies, alongside establishing a State Film Office within the Department of Tourism to oversee the accreditation and allocation of these credits. The main components include:

• Tax Credits for Salaries and Wages: A 25% credit on salaries or wages paid to Wisconsin residents, capped at $250,000 per employee, excluding the two highest-paid employees for productions with budgeted expenditures of $1 million or more.
• Tax Credits for Production Expenditures: A 25% credit for production expenditures incurred within the state, with refundability if the credits exceed the company’s tax liability.
• Tax Credits for Capital Investments: A 25% credit on depreciable tangible personal property or real property investments for the first three years of doing business in Wisconsin.
• Sales and Use Tax Credits: Credits equal to sales and use taxes paid for tangible personal property and taxable services used in film production within the state.
• Annual Cap and Reporting: A limit of $5 million in tax credits per fiscal year, with a maximum of $1 million to any single applicant, and an annual report to the legislature detailing credit allocations and program efficiency recommendations.

Comparison with Georgia’s Film Tax Credits

As Wisconsin introduces Senate Bill 1026 to bolster its film production industry through a series of tax credits, it’s instructive to compare this initiative with one of the country’s most successful film tax credit programs: Georgia’s. Both states aim to attract film production companies, but their approaches reveal key differences that could influence the scale and type of production each state attracts.

Tax Credit Rate

• Wisconsin: Offers a 25% tax credit on salaries, wages, and production expenditures incurred within the state.
• Georgia: Provides up to 30% in tax credits for qualified productions, including a base of 20% and an additional 10% for including a promotional logo.

Cap on Credits

• Wisconsin: Imposes a cap of $250,000 per employee for salaries and wages, excluding the two highest-paid employees for productions with budgeted expenditures of $1 million or more.
• Georgia: Does not impose a cap on the amount of credit a single production can claim, which can be particularly beneficial for larger productions.

Refundability and Transferability

• Wisconsin: Allows for the refund of tax credits if the total amount claimed exceeds the company’s tax liability.
• Georgia: Credits are transferable, allowing companies to sell unused credits, which provides flexibility in monetizing incentives.

 Annual Cap

• Wisconsin: Limits the total allocation of film production and investment tax credits to $5 million per fiscal year, with no more than $1 million allocated to any single applicant.
• Georgia: Does not limit the total amount of film tax credits allocated annually, contributing to the state’s success in attracting a high volume of film production activities.

Economic Impact and Attractiveness

• Wisconsin: The proposed bill aims to replicate Georgia’s success but may see a more gradual growth due to the imposed caps.
• Georgia: The lack of caps on individual credits and the total annual allocation has made it highly attractive for large-scale productions, significantly boosting the state’s economy.

Recent Developments in Georgia

In February 2024, Georgia lawmakers proposed new limitations on the state’s film tax incentive, which is currently the largest in the country. The proposed changes would cap the amount of credits sold each year to 2.5% of the state’s estimated revenue, amounting to approximately $902 million for that year. This proposal is designed to manage the redemption of credits more effectively, aiming to prevent the accumulation of a significant financial liability in one go.

Potential Economic Implications for Wisconsin

Wisconsin’s Senate Bill 1026, introduced in February 2024, represents a strategic move to stimulate the state’s film production industry through tax credits. This legislative initiative could significantly impact Wisconsin’s economy by attracting film production companies to the state, potentially leading to job creation, increased spending in local communities, and a diversification of the state’s economic base. Here, we delve deeper into the potential economic implications for Wisconsin and compare its approach to Georgia’s highly successful film tax credits program.

Job Creation and Economic Growth

Introducing tax credits for film production companies under Senate Bill 1026 could lead to substantial job creation within Wisconsin. By incentivizing film productions to operate in the state, the bill could generate new employment opportunities both directly within the film industry and indirectly in supporting sectors such as hospitality, construction, and retail. This influx of jobs could significantly reduce unemployment rates and stimulate economic growth across various sectors.

Boost to Tourism

Film productions have the potential to boost tourism, as fans often visit filming locations. By attracting more film productions to Wisconsin, Senate Bill 1026 could enhance the state’s visibility on a national and international level, drawing tourists interested in exploring the settings of their favorite films and TV shows. This increase in tourism could benefit local businesses, including hotels, restaurants, and retail stores, further contributing to the state’s economic development.

Diversification of the Economy

Developing the film industry in Wisconsin could help diversify the state’s economy, making it less dependent on traditional industries. Diversification is a key strategy for economic resilience, reducing the state’s vulnerability to sector-specific downturns. By establishing a more varied economic base, Wisconsin could ensure more stable and sustainable economic growth in the long term.

Wisconsin’s Senate Bill 1026 represents a significant effort to attract film production companies through tax incentives, aiming to replicate the economic success seen in Georgia while avoiding some of the state’s challenges. This bill could positively impact Wisconsin’s economy by creating jobs, boosting tourism, and diversifying the state’s economic base if passed. The careful structuring of the bill, with caps and limitations on incentives, suggests a balanced approach to fostering the film industry while ensuring financial sustainability and a positive return on investment for the state.