What's in HB 873? The New Incentive Levels.

If the new terms of the Texas Moving Image Industry Incentive Program in House Bill 873 can be boiled down to three words, they would be: better, faster, more. The big change in scope is that the new rules add educational and instructional videos to the eligible pool and drop the qualifying criteria for minimum in-state spending to $250,000 for film or TV (from $1 million under the 2007 Legislature's HB 1634; the $100,000 minimum remains unchanged for all other projects). The rules still require that 70% of the cast must be Texas residents, but now only 60% of production must take place here – down from 80%. The new law also removes the old caps on the maximum grant payable and directs the Texas Film Commission to establish its own methods of calculating and awarding grants. This was a sore point for game developers, who were capped at $250,000 against $2 million for film, even though their overall budgets can often be comparable.

There's also a significant operational shift: Texas Film Commissioner Bob Hudgins has long advocated moving from the old system of calculating the grant based on the entire production budget to a "wage-only" system. This new process will give filmmakers and TV projects the option to apply based solely on the wages paid to Texas workers, meaning a higher proportion of a smaller slice of their budget. The final grant would be roughly the same through either method, but wage-only applications should be processed quicker because there would be less paperwork. Hudgins said producers "would get a thread more under the total spend option, but when they weigh out how much more effort would go in, they're not going to get anything significantly less by going for the wage-only option."

In the non-feature-film categories (commercials; music, educational, and instructional videos; and digital media), the grant is still capped at 5% of in-state spending. Texas Motion Picture Alliance President Don Stokes said, "We know that we could capture an even higher percentage of that work and become an epicenter for that kind of work if we could sweeten that percentage a little bit."

For full details of the Texas Moving Image Industry Incentive Program, see www.governor.state.tx.us/film/incentives/miiip.

Incentive Payments for Qualifying Productions

• The program pays productions an incentive of 5% of their total qualified in-state spending.

• Film and TV projects can get up to 17.5% or choose a calculation based on their Texas wages.

Total qualified in-state spending	Option A (% of spending)	Option B (% of wages)
$250,000-$1 million	5%	8%
$1 million-$5 million	10%	17%
More than $5 million	15%	25%
Underutilized area*	2.5%	4.25%

*Additional payment if 25% of the production is completed in an underutilized or economically distressed area

Eligible Projects

• Film and TV: feature films, documentaries, TV series, episodes, movies, and other TV programming

• Commercial projects: commercials, infomercials, and music, instructional, and educational videos

• Video games: computer, console, arcade, and Web-based games

• Postproduction/finishing: for film, television, and commercials

Minimum Qualifications

• $100,000 in Texas spending ($250,000 for film and TV projects)

• 60% of production completed in Texas

• 70% of paid crew and cast (or paid employees, for video games) must be Texas residents