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Rotten Peaches: How Governor Kemp, Cowed Politicians, and Hollywood Villains Enable Paying $198,000 for EACH Motion Picture and Video Job in Georgia
Free Republic Vanity ^ | April 25, 2022 | PoconoPundit

Posted on 04/25/2022 6:27:13 AM PDT by poconopundit



Batman battles numerous supervillians, but none is more clever than the Riddler, the best criminal mastermind in Gotham City.  The Riddler has no superhuman powers, but he excels at creating elaborate riddles, puzzles, and traps that constantly fool and evade Batman and the police.

Now in the real-world state of Georgia, dear FReepers, there's a taxpayer fraud scam so ingenious and intricately woven that it's likely the work of a gang of Riddlers.  Indeed, the schemers have spun their crime to the public as a great commercial success — which, of course, has only fueled the fraud's growth. 

The fraud is a decade-old state "business development" program designed to attract film and video industry jobs to Georgia.  This story shows why the program is not delivering on its promise, even as hoodwinked Georgia voters are told that politicians and film industry saints have miraculously transformed Georgia into a "second Hollywood" and created "92,000 film and video jobs" across the state — or so say Governor Kemp's cronies.



An Epic Fraud of Cecil B. DeMille Proportions

Georgia has been awarding hundreds of millions of dollars for more than a decade to the film and video industry through so-called "tax breaks" (actually these are full-blown subsidies as we'll soon discuss).  For its fiscal year 2021, Georgia awarded its biggest payout ever: a whopping $1.2 billion in incentives.

Georgia is also the most generous state by far in the amounts it awards Hollywood.  While most of the leading states who woo movie moguls have capped their annual incentives, Georgia has ZERO spending caps, yet paid four times what California spent.  See the chart:



What's the Payoff in Actual Jobs for Georgians?

The whole point of paying Hollywood incentives is to create Georgia jobs.  But Georgia state government has closed its books on the film industry program for more than a decade.  Only last year did Georgia finally pass a law that will steadily require auditing the program in future years.

Meanwhile, this operational secrecy has frustrated any serious discussion of questions like "How many good jobs where created?" or "what's the real benefit to Georgia?".

This is why we put together an Excel spreadsheet that estimates the actual motion picture and video industry jobs and wages that existed in the Peach State in 2021.

We believe our analysis has weight because it does NOT rely on the numbers of biased parties, such as Georgia's Business Development Department, state politicians, or firms in the Motion Picture and Video business.

Instead it uses statistics provided by a non-partisan and authoritative source, the Bureau of Labor (BLS) Statistics of the U.S. government, who annually tracks specific industries and 800 occupations within each state.

The BLS data shows the big picture: we used a few straightforward calculations and estimates to make it easy for the Georgia taxpayers to follow the logic.

Download the spreadsheet here (film_industry_fraud_in_georgia.xlsx -- 3.4 Mb).   It explains our methodology and provides links to the on-line jobs and wages data on the BLS website.  Here is the spreadsheet's summary table:

The table above estimates Georgia's total film/video industry jobs at 6,059 with wages paying $362 million dollars for 2021.

Now $362 million is only 30% of $1.2 billion, so we can assume the credits are paying not just for work done by Georgians, but also all kinds of equipment, plane tickets, hotel rooms, and the wages of non-resident industry workers from other states.  Indeed, the statute allows such expenditures.

But here's where the fraud gets ridiculous.  If Georgia taxpayers are paying more than three times the cost of all Georgia workers employed in the industry, it's no longer just an "incentive" -- Georgia is paying for the full payroll of every Georgian film/video part and fulltime job in the state, and tossing Hollywood an added $838 million of taxpayer money on top of that.

Now that's what I'd call a great deal for Hollywood... and an incredible fraud of Georgia families and small businesses! 



How Does Georgia's Bang-for-the-Buck Compare to Other States?

Let's look at Georgia's payouts from another angle.  Given the huge Hollywood subsidies, shouldn't Georgia compare favorably to other states in the number and quality of jobs created?

Well, to make that comparison, we looked at the high employment jobs in the Arts, Design, Entertainment, Sports & Media (ADESM) sector of the Industry.  And here's what the BLS data tells us:

  • Contrary to the hype about Georgia being the second Hollywood, Georgia is actually in 5th place among states in number of ADESM jobs.

  • California and New York hold 42% of ADESM jobs and in terms of wages.  Actually they are even more dominant since the annual wage rate is much higher for ADESM professionals in NY and CA.

  • Florida with zero incentives and Texas with a modest $45 million in capped incentives lead in the Southeast and greatly out-perform Georgia in job development bang-for-the-buck since the Rotten Peaches state has lower jobs despite $1.2 billion in 2021 incentives.

  • Finally, it's not as if the top 5 states have a monopoly on film/video industry jobs.  Thirty three (33) states offer incentives and almost half the ADESM jobs go to states other than the top five.  In short, jobs are still going to plenty of states, but only Georgia is paying billions for its meager 4% of the film/video business.


A Strong Scolding from Georgia's Internal Auditors

You know some monkey business is afoot when your own audit department writes a scathing report about your lack of adequate fraud and audit controls.  That's the gist of a 45-page report issued in January 2020 entitled, Performance Audit Report No. 18-03 -- Administration of the Georgia Film Tax Credit.

Here are the incriminating opening paragraphs of the state auditor's report:

    "As Georgia’s largest and arguably most generous credit, the film tax credit must be accompanied by sufficient controls to ensure that production companies are entitled to the credits granted.  Due to control weaknesses, companies have received credits for which they are not eligible and credits that are higher than earned."

    "Production companies receive a tax credit up to 30% of reported in-state expenditures if they spend at least $500,000 on qualified productions.  While not unusual for a state film tax credit, Georgia’s rate is higher than the income tax rate and rates for many other Georgia tax credits."

    "Additionally, the credit is uncapped for film production companies and can be sold to other taxpayers, providing taxpayers with an even greater incentive to misstate financial information to their benefit."

    "While the state has granted billions in credits, it does not have an adequate system of controls to prevent the improper granting of credits.  We found issues with the credit’s administration by the Departments of Revenue (DOR) and Economic Development (GDEcD).  The issues can be attributed to limited requirements and clarity in state law, inadequately designed procedures, insufficient resources, and/or agency interpretations of law that differ from our own."

The report goes on to say that despite granting more credits than any other state, Georgia requires companies to provide less documentation than any other, as the following map illustrates:



The Media's Role in Keeping the Scam Alive

Over the years, Hollywood's allies in the broadcast and media industries have worked overtime to keep Georgia's massive subsidies coming.  Here are two examples of hyped stories:

Indeed, it appears Hollywood may be playing state Republicans and Democrats against each other.  Republicans, who drove the Film Incentive program from the beginning, still control the governorship and statehouse.  And yet Democrats also strongly favor the incentives. 

Why isn't Stacey Abrams going after the Republicans on this juicy fraud?  The question answers itself.

Governor Kemp didn't invent this Georgia tax break scheme.  He inherited the program from another Republican governor, Nathan Deal.  But it's under Kemp's watch that the Hollywood subsidies have skyrocketed.

Now considering the meager number of jobs and annual incentive payments going into the billions, why has Kemp not capped payments like all the other states?.  Does Hollywood have Kemp over a barrel?  You'll recall: last year Republicans where widely criticized by Hollywood stars over anti-abortion laws and the Election reform bill passed last year.

Are the massive incentives paid to the Film/Video industry a kind of ransom payment Kemp owes Hollywood in an election year?  Given the gross financial mismanagement in this case, we are justified in asking such a question.


The Riddler's Illusion: Turning Incentives into "Tax Credits"

When you're trying to hide your fraud scheme from the public, is useful to twist words.

The Georgia film/video incentives are cast as "tax credits", which (on the surface) implies having to pay a lower tax.  But how is a tax credit useful to the film/video firm submitting its bill to Georgia?  After all, Hollywood firms generally don't own property in Georgia, so they have little to no tax liability in the first place.

Ah!  But what if the Hollywood firm is allowed to sell those tax credits to someone who lives in Georgia?  I'll bet there are plenty of high-income Georgia residents who would be pleased to pay 80 to 90 cents on the dollar to acquire those tax credits and save a bundle in next year's Georgia taxes.

So you see what's going on here?  The genius of this film/video scam is it's a double whammy.  It both richly subsidizes the movie moguls and puts money in the pockets of -- you name it -- politicians, insiders, Republican and Democrat donors.  Maybe even friends of Brian?

And there's no accountability: the sale of credits is done anonymously.  You can't get a list of the people who cashed in film credits because that would violate their tax priiiiiivacy.

Then, to close the deal, the complete lack of audits enables all kinds of accounting shenanigans.  You begin to see why this fraudulent scheme has a life of its own.  Or to quote the famous Aqualung song:

      Brian stole the handle and
      The train it won't stop going
      No way to slow down.

        Jethro Tull, Locomotive Breath


Second Hollywood? A Flawed Goal from the Start

Even after a decade of enriching Hollywood at taxpayer expense, Georgia has failed to build a sizeable motion picture and film business in the state.  There are actually a few good reasons why even trying to create a "second Hollywood" was an impossible dream:

  • Top Artistic Talent Lives and Works in New York and California — Talented artists feed off a community of other talented artists.  They know each other both personally and professionally.  And it's hard to break into that community if your career grew up outside it. 

    What's more, the BLS data shows New York and California talent is especially in demand in high-end jobs, such as art director, where two-thirds of industry wages go to professionals in those two states alone.

  • Multi-Cultural Richness — Are people with superior film industry artistic or business talent moving their families to Atlanta?  I suspect very few have done so.  One key reason is they don't want to sacrifice the cultural richness they find in big cities like Los Angeles and New York.  A rich culture is hard to define, but it often includes things like having an international melting pot of cultures and cuisines, museums, theaters, historic architecture, and a vibrant arts scene.

  • Not a Tourist Destination — One important calling card that Florida and California have is people fly to those states to vacation and have fun.  Georgia has far fewer attractions and if you're looking for beaches, well, that's a six-hour drive to Savannah.

It's time for Georgia's government to stop throwing more good money at a failed experiment that should have been killed a long time ago. 

It's embarassing to read Georgia's economic development brochures on-line.  They are shamelessly promotional and seem to convey the message: "If you bring your business to the Peach State, we're happy to give away the store"   and they don't even own the store!  The taxpapers do, and they are being ripped off.

An honest appraisal of Georgia's virtues must be the starting point for any economic development plan.  And the state does have some attractive points.  It's a great place to raise a family.  The weather is a big improvement over the frigid Northeast.  Trees and bushes flower all year long.  The good weather and lower cost of living is a magnet to retiring Baby Boomers.  And there's a strong culture around football and other sports. 

When Will Georgia Citizens Stand Up to End the Madness?

The scale of Georgia's cover-up in its Motion Picture/Video Industry incentives fraud is so pervasive that it may take several years to stop this elaborate Sting operation on the taxpayer.

But despite the hundreds of state legislators who remain silent, there are a few voices leading the fight to restore sanity.  Here's the perspective of two courageous watchdogs:

    “Georgia’s Film Tax Credit is the state’s largest special-interest tax break — costing over $1 billion per year — with virtually no safeguards to ensure benefits to Georgians."

    "Capping the credit would allow the state to manage the erosion of our state’s tax base while allowing lawmakers to better support high-return programs and services such as health care.  Lawmakers should place a cap of $100 million on the program, while ensuring the credit is targeted to companies that locate in Georgia and hire in-state workers.”


    "State budget documents released today show Georgia's film tax credit payouts continue to climb.  The state issued $1.204 BILLION in film tax credits last year.  That's $320 per Georgia household and 4.5% of the state-funded budget in FY 2021."

    "The cost is enormous and we're not getting a positive return.  It has to be one of the worst 'economic development' programs ever.  It needs to end."



TOPICS: Government; Politics; TV/Movies
KEYWORDS: briankemp; corporatewelfare; georgia; governmentfraud; kemp; welfare4therich
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To: poconopundit

The corruption is never ending. From Florida to Georgia
and states in between. Be it government, business, a great
deal of time and effort has been put forth to fleece the
taxpayers. And to think this is more than likely duplicated in every state of the union....over and above the massive fraud of the DC beast.


21 posted on 04/25/2022 7:38:32 AM PDT by V K Lee (Our CONSTITUTION. Written with DIVINE assistence by very wise men. A document unlike any other.)
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To: poconopundit

I am afraid that the visibility of movie making in Georgia is well-liked by Georgians even if it doesn’t make money. I lived in Columbus, and a lot of people talked about “The Walking Dead” and locally a lot of home-schoolers got to be extras in the Christian movie “Overcomer” (including my daughter). That’s an intangible perk to many.

Deal let the Hollywood-Sports axis dictate a lot of things in Georgia, and when Kemp ran, I asked him point blank about Hollywood and the NFL dictating policy to Georgians. He gave a red meat (but unspecific) answer. Kemp did stand up to Major League Baseball when they pulled the All-Star game over a voting bill that was passed.


22 posted on 04/25/2022 7:40:30 AM PDT by Dr. Sivana (“...we would live very well without Facebook."-B.LeMaire)
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To: Dr. Sivana

I lived in Columbus, and a lot of people talked about “The Walking Dead” and locally a lot of home-schoolers got to be extras in the Christian movie “Overcomer” (including my daughter). That’s an intangible perk to many.

* * *

Thanks, Dr. Sivana. Great testimonial to how Hollywood likes to pull heart strings to get what they want.

But every other state has bailed out of the big incentives.
Georgia voters may be the most gullible.


23 posted on 04/25/2022 7:55:25 AM PDT by poconopundit (Hard oak fist in an Irish velvet glove: Kayleigh the Shillelagh we salute your work!)
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To: V K Lee

... a great deal of time and effort has been put forth to fleece the taxpayers. And to think this is more than likely duplicated in every state of the union....over and above the massive fraud of the DC beast.

* * *

So true, V. K. To me, this state-driven fraud around “economic development” opens up a mostly neglected chapter in the Save America agenda.


24 posted on 04/25/2022 7:59:10 AM PDT by poconopundit (Hard oak fist in an Irish velvet glove: Kayleigh the Shillelagh we salute your work!)
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To: poconopundit

Excellent presentation.

It illustrates how Georgia Republicans are just Assistant Democrats.


25 posted on 04/25/2022 8:13:04 AM PDT by Lurkinanloomin ( (Natural born citizens are born here of citizen parents)(Know Islam, No Peace-No Islam, Know Peace)
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To: poconopundit

Thanks. I will read it later.


26 posted on 04/25/2022 8:46:27 AM PDT by ifinnegan (Democrats kill babies and harvest their organs to sell)
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To: poconopundit

Bkmk


27 posted on 04/25/2022 8:54:15 AM PDT by moovova
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To: poconopundit

movies are being shot in GA because the taxes in CA are prohibitive, ie they don’t want to pay their fair share...


28 posted on 04/25/2022 8:57:55 AM PDT by Chode (there is no fall back position, there's no rally point, there is no LZ... we're on our own. #FJB)
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To: poconopundit

This was Georgia’s plan since I left, back in 2009.

Import hollywood and we expected hollywoods politics to stay in CA.
GOP Establishment in GA’s end goal is obviously to turn the state Democrat again, and they’re succeeding sadly.

Good work on the research!


29 posted on 04/25/2022 9:23:58 AM PDT by SPDSHDW (You get what you let occur with no resistance. Everything Joepedo n' felons do is on your head.)
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To: poconopundit

A few years back I happened to review a drug test as the MRO at the hospital, of a cameraman working on a set in Georgia who had allegedly injured his back while working. He went to the emergency room was evaluated and released on Oxycontin.

The drug test came back positive for opioids and also marijuana.

I dutifully contacted his company that happens to be in Hollywood to notify them of one of their employees testing positive for marijuana.

The woman on the other end of the phone was not only rude to me asking why was I bothering her with the results of a drug test, but she also informed me that 90% of the cast and crew we’re probably going to test positive for marijuana anyway.

I brought to her attention the fact that this guy was on opioids for a chronic backbcondition. Apparently he had been taking the opioids ongoing around the clock for the past five years.

I suggested that she might want to look in to this employee to see if he was abusing medication and obtaining the medication by filing work injuries to his back. she said that’s what my Worker’s Compensation insurance is for thank you doctor goodbye and “click” she hung up on me.

Kemp Is well liked by a lot of establishment Georgia Republicans. The guy however is a meatball and an idiot. Georgia and the surrounding communities in particular that service and support the film industry get nothing.

Most of these employees including the cameraman don’t even live in Georgia.


30 posted on 04/25/2022 9:29:43 AM PDT by nikos1121
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To: poconopundit
Florida with zero incentives and Texas with a modest $45 million in capped incentives lead in the Southeast and greatly out-perform Georgia in job development bang-for-the-buck since the Rotten Peaches state has lower jobs despite $1.2 billion in 2021 incentives.

One more reason I'm happy to live in Florida with DeSantis at the helm...

Great Research - nicely put together - and could be a three part series. First then a recap and second - then a recap of the first two parts and the third. This is quality work pundit. You might be able to sell this to a medium sized paper. Have you been published before?

31 posted on 04/25/2022 10:19:30 AM PDT by GOPJ (MSNBC bimbos 'feel' companies that groom children shouldn't have to pay taxes.)
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To: logi_cal869

Probably all of them Numerous Marvel/Disney productions have been made here. I don’t know a single person employed in the GA film industry.


32 posted on 04/25/2022 10:23:13 AM PDT by Trailerpark Badass (“There should be a whole lot more going on than throwing bleach,” said one woman.)
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To: nikos1121

Good to hear this personal testimony, nikos1121.

What you say makes sense. If you’re directing a film shoot, you have certain cameramen you trust and who understand what you want to accomplish.

So if that’s true, there are limited opportunities for inexperienced Georgians to get the work they need to grow a career in the field.


33 posted on 04/25/2022 10:25:22 AM PDT by poconopundit (Hard oak fist in an Irish velvet glove: Kayleigh the Shillelagh we salute your work!)
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To: jacknhoo

Ralston is a snake. Let’s not forget this:

State Rep. Alleges Georgia House Speaker David Ralston ‘Lied to Trump’ About Following Through on Efforts to Convene a Special Session
https://georgiastarnews.com ^ | December 20, 2020 | Chris Butler

https://freerepublic.com/focus/f-news/3917648/posts

According to many Ga reps, they were threatened by Ralston not to sign the petition for a special session to examine the fraud in 2020. There was a news story about it too but I can’t find at the moment


34 posted on 04/25/2022 10:43:47 AM PDT by LilFarmer
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To: poconopundit; AdmSmith; AnonymousConservative; Arthur Wildfire! March; Berosus; Bockscar; ...
Thanks poconopundit.

35 posted on 04/25/2022 11:17:34 AM PDT by SunkenCiv (Imagine an imaginary menagerie manager imagining managing an imaginary menagerie.)
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To: poconopundit
Thank you!

Impressive package of work, even with a quick end-of-work-day skim.

Sounds like a money laundering operation run for the benefit of the political in-crowd and perhaps whoever they owed money. Hope you had a few specific recipients of the report in mind by the time you were finished.

...there's no accountability: the sale of credits is done anonymously. You can't get a list of the people who cashed in film credits because that would violate their tax priiiiiivacy.
My guess is since the credits involve tax monies otherwise due, the initial entities of record that qualified for the credits could be made to account for any disposition to third parties??? (Assuming, of course, a dedicated GA law enforcement agency was involved.)

But it's under Kemp's watch that the Hollywood subsidies have skyrocketed.
Such assertions, associated evidence and half-truths could be a small part of what Abrams and Biden will use to defeat Kemp.

36 posted on 04/25/2022 2:30:45 PM PDT by frog in a pot (The General Election is NOT THE BEST TIME OR PLACE to cure your state’s political ills.)
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To: poconopundit

How many jobs were created? …….

Interesting question. They say that 92,000 were created.

Yet, only 2 or 3 weeks ago there was a story about a State House Rep wanting to cap the subsidy, Ralston and others having a baby over the proposed bill, and they were all complaining about the state losing 10,000 jobs.

Quite the difference between 92,000 and 10,000.

And I think just as importantly, how much tax revenue is generated from all of this. It’s insanely easy for companies to cook the books, with a 70k page tax code and an army of bean counters, lawyers and accountants. It’s funny to read and hear folks complain about Amazon, GE and other companies not paying taxes. Most folks are incapable of grasping tax deductions and business expenses.

Oh…..they made a movie in Georgia. Great. Georgia should be getting all sorts of tax revenue. NOPE. After our calculations we’ve learned that our expenses were actually slightly more than what we expected and therefore we need some Georgia taxpayer money. Otherwise we’re leaving.

So, some homeowner gets a break and they use the house for 5 days of filming. Homeowner gets paid. Homeowner has to report the income and pay taxes. Movie company writes off the business expense and pays no taxes on anything. Gets the tax money that the homeowner paid, back with the tax credit.

Great work if you can get it.


37 posted on 04/25/2022 3:37:56 PM PDT by qaz123
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To: jacknhoo

And Ralston already tossed it to the scrap heap. He’s such a POS. As bad, or worse, than Kemp Duncan Miller Raffensberger Williamson and so many others.


38 posted on 04/25/2022 3:41:24 PM PDT by qaz123
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To: poconopundit; jacknhoo

What’s happening to Georgia is the same thing that is happening to Texas and Tennessee.

It all started with Rick Perry....Texas is Open For Business. He was all over the globe. Slickly said that anyone that moved there would become Texans.

Yeah....not so much. With the sprawl in the big Texas cities, just like the sprawl in the Atlanta Metro area, it seems like the ONLY folks that are moving here are liberals.

There was a concerted effort, even had a Facebook page devoted to it, about the 6th US Congressional district....Flipthe6th. Well, they did it. Of course, it’s the typical upper middle class and above, Liberals that love all the liberal causes, but are completely insulated from the consequences of them.

At the end of the day, this and many others are all about the politicians finding other income streams to get rich on. No more do they have to rely solely on the farmers, developers slamming up homes wherever they can find enough space, or the chicken plant owners. Now they have the movie industry, electric cars that no one buys, Microsoft, and Facebook.


39 posted on 04/25/2022 3:47:00 PM PDT by qaz123
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To: Dr. Sivana

Kemp stood up because of the lost revenue. Nothing more.

Revenue that was so completely overstated, it was ridiculous even for Kemp. Over $100,000,000 for a 3-day event that most folks could care less about.

Celebrity Softball Game .... Home Run Derby .... All-Star Game

And, contrary to other stadiums that are in neighborhoods in cities, everything in Georgia is enclosed into the park itself. So, the cops have folks roaming the parking lots for bootleg shirts, hats, jerseys. Everything is in the park with EVERYTHING so overpriced you have to take out a loan....$14 for a domestic beer.

You’re right about the visibility. I live in Newton County. The Vampire Diaries, no longer on tv, is an industry in Covington. Folks come from all over the world to walk around and see where Act 5, Scene 6, Episode 31, Season 5 was filmed. No biggie. But, go talk to the business owners who don’t get much, if anything, when the square is shut down for filming. And the folks working these productions are, more or less, gypsies from out of town.

And, on top of all of the amazing research done by, poconopundit, lets not forget about Georgia’s Right To Work laws and how the companies, all Liberals/Democrats, can so easily take advantage of the workers. Let the companies be forced to start paying union wages, under union contracts and we’ll see how long they stay in Georgia.


40 posted on 04/25/2022 3:55:08 PM PDT by qaz123
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