Texas One Step Closer to Film and TV Incentive Increase

Woody Harrelson and Matthew McConaughey at the April 1 hearing on Senate Bill 22, establishing the Texas Moving Image Industry Incentive Fund, the biggest change to production rebates in the last two decades. Now the House has voted out an amended version of the bill, industry advocates are cautiously optimistic that there's a new era coming for production in the Lone Star State. (Screengrab from Texas Senate feed)

Texas may be on the verge of a massive boost to film and TV production as the House approved the biggest reform to the state's incentive programs in the past 20 years.

Earlier this week, the House voted 114-26 in favor of Senate Bill 22, establishing TMIIIF, the Texas Moving Image Industry Incentive Fund. The bill has now been sent to the Senate, where the upper chamber will discuss changes made by their colleagues across the pink dome. If they concur, the bill will go straight to Gov. Greg Abbott to be signed. If not, then both chambers will send appointees to hammer out the differences in conference committee.

TMIIIF is, of course, not to be confused with TMIIIP, the Texas Moving Image Industry Incentive Program. TMIIIP was founded in 2005 as a tax rebate program, whereby films, TV shows, and games produced and created within Texas would receive a rebate on a portion of their in-state spending.

TMIIIF does very much the same, but with several core differences. First, TMIIIP relies on funding approved by lawmakers every two years, which has lead to immense volatility, switchbacking between $22 million and $200 million over the last two decades. TMIIIF would guarantee a set amount of money every biennium over the next 10 years, which removes that volatility. Second, TMIIIF is a fund outside of the treasury, a financial sidestep necessary to take it out of the biennial budget tug-o-war. Third, SB 22 makes some dramatic changes to how the cash is distributed:

• TMIIIP gives the Texas Film Commission discretion on grant percentages, but the TMIIIF language sets them in stone (5% for $500,000 to $1 million in eligible in-state spending, 10% for $1 million to $5 million, and 25% for $5 million and above).

• The bill adds "uplifts" of between 1% and 2.5% for certain kinds of spending – for example, for post-production, filming in rural areas, or the nebulously-defined “Texas heritage project.”

• And the big one: residency requirements. TMIIIP requires that 70% of all cast and crew be Texas residents – or rather, required, as last session that number dropped to 55%, under pressure from certain industry insiders (well, basically, Yellowstone producer Taylor Sheridan). Under TMIIIF, this drops to 35% in the first biennium, rising by five percentage points per biennium until it hits 50% in 2031.

This last clause is where the bill gets divisive in the industry. On one side, advocates argue that the bill overall is better than what Texas has now – more money, more predictability – and that most producers will see the wisdom of using local cast and crew rather than spending extra money on hotels and per diems to bring in out-of-state talent. However, there's a last-minute scramble to get another of those uplifts added specifically for in-state hiring, just to sweeten the deal for producers arguing with their production accountants about where to film.

But the House and Senate are in agreement about the bill, so that's a minor debate, right? Well, that's not the only question still to be resolved. The House amended the bill to make it more acceptable to fiscal conservatives, dropping the Senate's request for $500 million per biennium to $300 million. That original number came from Lt. Gov. Dan Patrick, who has been a huge booster for this bill, and he may well hold his ground on that extra $200 million. There's also a real question about the funding mechanism – that the cash is effectively pulled out of taxes raised before it hits the treasury – and its constitutionality. This leads to another question as to whether this is a replacement for TMIIIP or both programs will coexist, and so far no one seems to have a clear answer on that one.

For now, the Texas film community is somewhere between "jubilant" and "cautiously optimistic." The Texas Media Production Alliance (formerly the Texas Motion Picture Association) called it “landmark legislation [that] strengthens our creative economy, creates jobs, and positions Texas as a premier destination for storytelling.” Meanwhile Chase Musslewhite and Grant Wood, co-founders of lobby group Media for Texas, echoed that sentiment, adding that “this victory belongs to every crew member, storyteller, entrepreneur, and advocate who believes in the power of Texas-made media. We’re proud to say: this is just the beginning. The future of film is Texas. #ComeAndFilmIt”