Alabama’s Republican supermajority is typically moving in unison, but one amendment introduced in the House of Representatives during session spurred an intense debate within the party.
The debate came on an amendment to a bill that would have increased the film incentive cap while also expanding the incentive to other entertainment ventures including the music industry and gaming.
Alabama currently has a $20 million cap on its incentive, which is offered solely for movie and TV productions.
The bill, sponsored by Rep. Jamie Kiel, R-Russellville, initially would have sent he cap raised incrementally to $150 million, stepping up to $65 million in the first year, then $110 million, then $150 million.
But a substitute in the House Ways and Education committee gutted that provision entirely, leaving the cap in place at $20 million.
But House Majority Leader Scott Stadthagen, R-Hartselle, brought radical amendment on the House floor: remove the incentive cap entirely.
His argument is that the film cap artificially limits the potential boon that the state could receive from the film industry, specifically pointing to Georgia’s unlimited incentive program as giving the neighboring state a competitive edge that cannot be challenged simply by raising the cap.
That drew the ire of some Republicans, who noted that the state has not offered any economic incentives without a cap, despite lately restructuring incentives to be pay-as-you-go.
That structure, Stadthagen said, removes the risk from the equation.
“The cap is irrelevant,” Stadthagen said multiple times on the floor.
Stadthagen referenced a study by former AUM economics professor Keivan Deravi, who now operates a consulting firm Economic Research Services, in Montgomery. The study found that “for every $1 increase in tax rebates for the film industry, the increase in the State’s GDP is projected to amount to $9.9. Similarly, wages in the State are estimated to increase by $5.6 and direct spending will increase by $3.6.”
In Stadthagen’s view, that would be equivalent to trading a $1 bill for a $10, and questioned why anyone would ever want to limit that obviously profitable arrangement.
Many of his Republican colleagues came to the floor to express their agreement, but several others voiced concern about suddenly removing the cap entirely.
House Education Budget chair Danny Garrett, R-Trussville, told Stadthagen he is not necessarily against the idea in theory, but said there needs to be more of a process before the Legislature takes such a large step to introduce an unlimited cap.
Rep. Andy Whitt, R-Harvest, took a more critical approach, taking issue with Stadthagen bringing such a substantial amendment on the House floor instead of working with colleagues to vet the unlimited cap through the committee process.
“Have you talked to the Alabama Film Office about this?” Whitt questioned. “No, you haven’t.”
The Alabama Department of Commerce, which administers the Alabama Film Office, did not oppose the bill, but it also did not come from them.
Stefania Jones, director of marketing for the department, said Commerce favors a more measured approach to raising the incentive cap.
“That cap has been in place for a long time,” Jones said. “The reason it hasn’t budged a lot is we report annually on how those funds are expended, and what we have shown hasn’t shown any need to argue for an increased cap. That does’t mean that we couldn’t use it; there may be projects we haven’t considered because we knew it would take us over that limit. That’s not to say that we couldn’t use more, but we would take a much slower approach to look at what we would ask for.”
Jones said there are talks about raising the cap, and the Department of Commerce may introduce its own legislation to that effect as soon as the next regular session.
But while raising the cap may make economic sense, Jones said removing the cap entirely would likely require a transformation of the Alabama Film Office.
“We wouldn’t have the capacity to administer something like that,” Jones said. “The film office is about four employees, with film and TV production as their specialty. If we were going to expand the programs supported by the film office and film incentive, we are going to have to look at expanding our film office. I don’t know what that looks like … The point is, no matter how impactful these incentives are, we have to take a very measured approach to how we increase them, not only to be responsible of keeping our budget balanced and safe, but also to be responsible with what we’re given.”
Despite many House Republicans showing their support during the course of a two-hour debate on Stadthagen’s amendment, he ultimately withdrew the amendment and instead offered a more reserved $50 million cap, which gained passage by the House. However, the incentive changes didn’t make it across the finish line, dying in the Senate before reaching the floor.