The Future Is in Flux for the Texas Film Incentive Program

Texas loses productions to states with bigger and better incentive programs

Don't call them film incentives. For nearly a decade, the creative industries have been explaining that the Texas Moving Image Industry Incentive Program isn't just for cinema, but TV and video games, too. Now, as the program faces its toughest funding battle, and threats to its continued existence, advocates want to dump the word incentive and call it what it is: a rebate.

Call them incentives, call them rebates, call them grants, but whatever the name, government-backed production support is a global reality. The Association of Film Commissioners International estimates that there is $3 billion in media funding around the world. From Asia to Eastern Europe, and in the majority of U.S. states, production incentives are the norm, and for one good reason: They attract and create jobs. Publicizing his own nation's program, Polish Deputy Minister for Culture Jarosaw Sellin recently called film production "a small factory, which operates for a year or two, absorbing hundreds, sometimes thousands of people, co-producers, technicians, craftsmen, and various subcontractors."

Texas should be a top movie, television, and video game production state. It has the locations, it has the talent pool, it has the technical infrastructure, and it has the film and gaming schools producing the next generation of creatives. However, for over a decade it's lost productions to states with bigger and more generous incentive programs.

Financial support isn't the only reason a producer will choose one state over another, but it can be a major one. For example, Georgia launched its program in 2002, but revamped it heavily in 2008 after the indignity of losing the story of native son Ray Charles in biopic Ray to Louisiana and its generous inducements. Less than a decade later, the "Made in Georgia" tag has become ubiquitous in TV and movie credits, and the Peach State is regularly the third largest production center in the U.S. Similarly, before Texas established its current rebate program (the Texas Moving Image Industry Incentive Program, or TMIIIP) in 2007, it suffered a massive talent drain to major incentive states like Louisiana.

For Austin Film Society CEO Rebecca Campbell, those exits aren't just abstract numbers. It's people she knows personally. It's Jo Edna Boldin, the Austin casting director that moved to New Mexico. It's key grip Kurt Kornemann, who had worked on dozens of Texas projects, from Rushmore to Grindhouse, who also went west. It's line producer Dominic Cancilla, who used to rent an office at Austin Studios but is now working out of Atlanta. She said, "The incentives war has been going on for years, and it becomes this thing where you lose important people bit by bit."

When TMIIIP is adequately funded, the productions come, and the talent stays. Yet as the Texas Legislature considers its budget, the program is under threat of being severely underfunded. Moreover, three bills have been filed this session that would do away with TMIIIP completely: Senate Bill 99 by Sen. Bob Hall, R-Canton; SB 244 by Sen. Konni Burton, R-Ft. Worth, and House Bill 779 by Rep. Matt Shaheen, R-West Plano. Shaheen's and Hall's proposals go even further, calling for the complete abolition of both the Texas Film Commission and the Texas Music Office. If that happens, then not only would TMIIIP go, but all the promotion efforts undertaken by those offices, the professional directories and location scouting files, go with them.

However, it's the fate of TMIIIP that is causing the most immediate concern. Texas Motion Picture Alliance Executive Director Mindy Raymond Benson said, "If we are not offering a program, [producers] will not offer us a second chance."

Texas should be a top movie, television, and video game production state. However, for over a decade it’s lost productions to states with bigger and more generous incentive programs.

It's not hard to validate her fears. In 2016, Florida let its system lapse, and immediately HBO's football dramedy Ballers decamped to California. Why California? Because even Hollywood had suffered from runaway production, and in 2015 the Golden State introduced its own production incentives. As a result, location shooting in Los Angeles increased by 6.2% in one year. When those numbers were released on Jan. 17, Paul Audley, president of greater Los Angeles film office FilmL.A., credited the incentives package for the boost, saying it "is working as intended in bringing exciting new projects to the area."

By contrast, Austin has lost three shows in short order. Two series – HBO's The Leftovers and ABC's American Crime – left after one season apiece, while Robert Rod­ri­guez transferred season 3 of From Dusk Till Dawn: The Series from his East Austin Troublemaker Studio to New Mexico. Camp­bell says that with both American Crime and Dusk, "incentives were cited as a reason. That's an erosion of the crew base, that's the loss of great jobs, and it's simply leaving money on the table." Moreover, she noted that no new shows have moved in to take their place.

The cut's impact has been a little different for game studios in Texas. The industry advocacy body the Entertainment Software Association has found that projects are still moving forward, but they are likely to be smaller in scale, and hire fewer developers.

Not all incentives are created equal. The British Film Institute gives grant and loans to qualified filmmakers as early as the scriptwriting phase: At the other end of the spectrum, West Virginia simply offers a tax credit. The Texas program is in the form of a refund after the project is completed. Benson said, "No money is given out beforehand. It's given after the production has spent their money, and gone through very intensive audits."

That's why Rep. Donna Howard, D-Aus­tin, agrees that this is really a rebate. The House Appropriations Committee member said, "Not only is it bringing in a good, clean industry that has a wide variety of job levels that allow for promotion among different education levels, but you're also verifying the outcome before they get their money."

The Legislature has just started budget negotiations, and currently neither the House nor the Senate has allocated any cash for TMIIIP in their draft spending plans. However, that's just a launching point, and Gov. Greg Abbott has suggested to the industry that he would like to see $70 million made available for the next two years. That figure would basically equal the $62 million lawmakers appropriated in 2009, plus inflation. While Benson said she would like closer to $100 million (nearer to what New Mexico has allocated), "if we can get it to $70 million, that's more than double what we had last session."

Yet the fund is digging itself out of a hole. In 2013, lawmakers approved $95 million for the following biennium. Two years later, they slashed that by two-thirds, to only $32 million.

The program got hit by a double whammy. First, its three biggest advocates were nowhere to be seen. Sen. John Carona, R-Dallas, who wrote the original legislation in 2005, lost his 2014 primary fight; Rep. Dawnna Dukes, D-Pflugerville, who had revised the program and helped protect it in the House Appropriations Committee, was absent for most of the session due to health issues; and Gov. Rick Perry, who beat the drum loudly for Texas film, was under siege for suspected malfeasance at other, unrelated business incentive programs.

The second injury was self-inflicted by the moving image industry itself. Gaming has changed and grown massively since it was added into TMIIIP in 2007, and last session there was discussion about splitting it into its own program, or allocating a set amount to games vs. TV and movies. At the same time, producers were pushing to nearly double the program budget to over $180 million. Faced with bickering industries, lawmakers basically declared a plague on both their houses, and slashed the fund. Of course, this meant production left, and Texas lost out on tax revenue. Howard said, "There were no winners."

This year, those divides are behind them. TXMPA, ESA, and the Motion Picture Assoc­iation of America are all working toward the same target: a single, well-funded pot for all to share. Being on the same page, they also hope to stress the job-creating rebate argument to lawmakers. If they can't, then Benson sees the recent production lull becoming a full-scale exodus, as producers will get the message that Texas isn't serious about entertainment. Without a properly funded TMIIIP, she said, "The writing's on the wall for us."

Ups and Downs

State incentives funding since the program's inception, in millions of $ per biennium.

2005: The Texas Legislature passes Senate Bill 1142 by Sen. John Carona, R-Dallas, creating the Film Industry Incentive Program. However, they do not fund it.

2007: Rep. Dawnna Dukes, D-Pflugerville, authors House Bill 1634, renaming the incentives as the Texas Moving Image Industry Incentive Program, and extending it to cover video games and digital media. The Legislature finally funds the program with $22 million for the 2008-09 biennium.

2009: Dukes authors HB 873, adding educational and instructional videos to the list of eligible projects, dropping the minimum qualifying spend for TV and film, and boosting incentives for productions in historically underutilized areas like East Austin. The Lege ups the biennial budget to $62 million.

2011: As part of dramatic statewide budget cuts, the program's budget is cut to $32 million.

2013: Lawmakers allocate a record $95 million.

2015: After a failure to reach agreement between the film and video game industries, lawmakers slash the funding to $32 million.

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