Movies or Medicaid: A False Choice at the Texas Legislature

"Man, come on."

That was the exasperated exclamation from Rep. Garnet Coleman, D-Dallas, as funding for the Texas Moving Image Industry Incentive Program took its traditional biennial beating in the Texas House of Representatives. If the current lower chamber proposal stands, then the rebate program designed to encourage the creation of in-state jobs in TV, film, commercial, and video gaming production will see an 85% reduction in allocated funds – a cut that comes at the worst time conceivable.

However, don't panic yet. On April 5, a week after the House proposed its gouge, the Senate passed its version of the budget, including $474 million for job creation and promotion in Texas (aka business incentives). That total specifically set aside $50 million for TMIIIP – a 56% increase to the program.

Now those two rival proposals head into conference committees, where delegates from both chambers will thrash out a final budget. As House Appropriations Com­mit­tee Member Donna Howard, D-Austin, put it, "There's a lot more to be done before the ink dries."

A Political Football

After a decade of slashed spending and bad faith political arguments about "Liberal Hollywood," the film, game, and TV industries expect TMIIIP funding to be a political kickball. But when the current legislative session began in January, the situation seemed less volatile than usual. When Gov. Greg Abbott filed his proposed budget in February, he proposed increasing the appropriation from $32 million for the current biennium to $50 million for 2020-21 – not a huge jump, but enough to send a clear message to the creative industries that Texas sees the value of their investments. However, the House Appropriations Com­mit­tee turned around and recommended only a fraction of that sum – $22.8 million, the lowest figure since the program was first funded in 2008.

Jump to March 27, as House Bill 1 – the state's draft budget – finally reached the House floor for a full debate. It was already set to be a grinding slog of a day, with 244 proposed amendments to the 879-page bill (plus another 43 amendments to those amendments). Enter Rep. Jeff Leach, R-Plano, who filed two amendments pulling $18 million out of that ask, leaving the entire Texas Film Commission and all its programs with only $4.8 million: basically, enough to keep operating, but with nothing to fund TMIIIP.

The situation could be worse. HB 432, by Leach's fellow arch-conservative Rep. Matt Shaheen, R-Plano, would end TMIIIP and abolish the Texas Film Commission. Mercifully for program advocates, that bill has yet to even be heard in committee, and with only seven weeks left in the current session, it's basically DOA. However, if lawmakers don't allocate any cash, the program may as well be dissolved.

Leach's plan – adopted by lawmakers on party lines – reallocates the money to health spending, including $15 million as contingency extended Medicaid coverage for new mothers, from the current limit of 60 days to a full 12 months. The Plano lawmaker argued that putting women's health over production incentives was "a question of priorities." However, Brian Gannon, Aus­tin Film Commission executive director, described that framing as "Sophie's Choice – Medicaid or fund film, which side are you on?"

The Democratic lawmakers have already rejected the either-or model proposed by Leach. In the dramatic back-and-forth on the House floor, Rep. Coleman filed his own amendment to help boost investment in health care for new and expecting mothers without damaging jobs. He proposed that the money come from the state's existing Match for Medicaid account, which he called "the appropriate strategy ... as opposed to doing something that would harm industry in this state."

And that one word – industry – is the important one.

Making the Case for Business

Two common misconceptions about TMIIIP are 1) that it's an incentive, and 2) that it's an arts grant. First up, it's a rebate, claimed back by projects only after production is complete and accounts have been filed (however, Rep. Howard noted, reminding people it's a reimbursement after the fact "falls on deaf ears"). Second, it's all about business, which is why it's under "Create Jobs and Promote Texas" in the budget, rather than "Arts and Cultural Grants," and why it's administered by the Texas Film Commission within the governor's office, rather than the Commission on the Arts. When it comes to being considered business rather than culture – at least in terms of incentives – Mindy Raymond, Texas Motion Picture Alliance board member, said, "We're happy that we're there right now."

During the March 27 debate, Leach made the standard claim that film, TV, and gaming production would come to Texas with or without incentives. However, Austin Film Society CEO Rebecca Campbell said that, in rebutting his argument, "I would go mathematical." Over its decade in operation, TMIIIP has generated $5.33 of in-state spending for every dollar reimbursed. That means even by cutting the allocation from Abbott's $50 million to the initial House figure of $23 million, "That's $150 million of jobs and spending that doesn't happen in Texas." If the Leach number stands, she fears the state could lose a quarter of a billion dollars of business. She said, "It's been proven time and time again that they come and film here if we have the incentives, and we've been able to show an immediate, direct economic effect."

And there's plenty more business where that came from. Gannon said that he spent much of last week in Los Angeles, meeting with producers of projects that are eager to move to Austin, and incentives are part of their calculations. Quite simply, he said, "If we have the money, we'll get the business."

With Abbott and the Senate pushing for $50 million, and House Democrats in opposition to both the House's draft $22.8 million and Leach's $4.8 million scheme, onlookers are quietly optimistic that the political tide has turned in favor of TMIIIP. However, it's not just about Texas politics. Across the film and TV industry, Raymond said, "All eyes are on Georgia right now." Due to that state's generous incentive package, Atlanta has become a major filming center, spending much of the last decade topping the charts for both spending and number of projects produced. However, Georgia lawmakers recently passed what has become known as the fetal heartbeat bill, which would effectively ban abortions after six weeks. The measure could still be vetoed by Gov. Brian Kemp, and he's already under major pressure from studios and filmmakers who have said that they will withdraw from the Peach State if the bill passes. If shows start to leave Georgia, Texas is primed to be a potential new home.

(Not that state legislation are the only political factor. The biggest recipient of TMIIIP rebates is video game development, and like much of IT that sector is highly dependent on foreign engineers. Massive delays in visa applications mean game studios with offices in the U.S. and Canada are sending talented staff north of the border, where visa processing is measured in weeks, not months or years.)

So now it's a battle of the calendars. Kemp has until May 12 to veto the abortion clamp-down; meanwhile, the Texas Legis­lat­ure must have a finalized budget before the session ends on May 27. Those dates are important, because many major shows (including several already here) will be signing location and shooting contracts for the fall season starting in June. This gives Texas a narrow window to convince producers and gaming studios that the state wants them to bring their jobs and investment here, and so film, gaming, and television lobbyists will be working throughout the budget conference committee process to get the program back up to that planned $50 million. So until Gov. Abbott signs HB 1, Raymond said, "We just keep singing what we're singing."