JLARC recommends bonus credit for multi‑season TV series and formal allocation to smooth volatile film incentives

Ellen Miller, lead analyst for JLARC’s incentives review, told the commission that Virginia’s film, media and tourism incentives support activity but have produced large year-to-year swings that make a sustainable local film industry difficult to build. "We found that film activity supported by the film incentives varied widely from year to year, making it difficult for the state to develop a sustainable film industry," Miller said.

Miller summarized the three film‑related incentives: a refundable motion picture production tax credit (a base credit equal to 15% of eligible filming expenses), a gubernatorial motion picture grant, and a sales‑tax exemption for production inputs. JLARC staff reported the film tax credit is the largest program of the three but noted an annual allocation cap mechanism that can be stretched across years; the panel said the cap process has contributed to volatility. JLARC documented 42 incentivized film or television productions between fiscal 2015 and fiscal 2024 and said one large production yielded $36 million in credit awards allocated over multiple years.

To reduce volatility and encourage longer‑term production commitments, JLARC recommended the General Assembly consider (1) a 5% bonus tax credit for television series that commit to filming a second and subsequent seasons, and (2) a formal method to allocate credits across multiple years for very large awards. Miller said the bonus targets productions that are most likely to create sustained local employment (TV series) while the allocation method would allow large awards to be spread so the Film Office can continue to make new awards in other years.

JLARC also reported numeric comparisons of economic impacts. The office described three benefit tiers across incentives: the film grant produced moderate economic benefits relative to other state incentives, the film tax credit produced low benefits on average, and the production sales‑tax exemption produced negligible benefits.

Tourism Development Financing Program

JLARC’s presentation next turned to the Tourism Development Financing Program, a gap‑finance tool for large lodging projects that addresses local lodging deficiencies. Staff said nine projects were approved during the study period and that the state’s share of gap financing totaled about $95 million. "The program addresses lodging deficiencies and has high economic benefits in return," Miller said, noting projects ranged from boutique hotels to large resorts such as Kalahari in Spotsylvania.

JLARC recommended administrative changes to reduce burdens in the sales‑tax remittance and repayment process, and suggested the Virginia Tourism Corporation review the program’s three‑tier structure (based on capital investment) because most approved projects fell into the smallest tier. The office also recommended considering a statutory minimum share of out‑of‑state visitation for project eligibility so the program more directly brings new dollars into the Commonwealth.

Governor’s New Airline Service Incentive Fund

JLARC reported the airline fund (created in 2020) has awarded about $340,000 through FY24 for marketing 18 new routes. Staff concluded the grants are too small relative to route start‑up costs and airport or federal subsidies to influence airline decisions about launching service, although the grants can help raise public awareness of new routes. The office offered two policy options: eliminate the program because it has negligible economic returns, or retain a streamlined, better‑aligned program (including expanding eligibility to retention or higher frequency) and reduce administrative layers.

Media provider equipment exemption

JLARC analyzed the media provider equipment sales‑tax exemption and found the exemption (expanded to include broadband equipment in 2022) cost roughly $64 million between FY15 and FY24 and about $11 million per year by FY24. Staff said the exemption supports communications infrastructure investment and public safety systems, but is not targeted to underserved areas and produces negligible economic returns compared with other incentives. JLARC recommended the Joint Subcommittee on Tax Preferences review whether to split the broadband component from traditional media exemptions, consider converting the exemption to a targeted tax credit, and give the exemption an explicit expiration date (it currently lacks one).

Next steps

JLARC staff said the General Assembly could consider the recommendations during the 2026–27 budget and policy process. Miller paused the presentation for committee questions and said the office would provide more detail in the written report accompanying the briefing.

Representative quotes in the record include Miller’s summary of volatility and a Department of Aviation official’s remark during Q&A that streamlining and more meaningful awards could improve the airline grant’s usefulness. The commission did not take formal votes on these recommendations at the meeting; JLARC will publish the full report and staff recommendations for legislative consideration.