Lawmakers took another big step yesterday towards the biggest boost in film and TV incentives in the history of Texas. However, stumbling blocks that could make its passage into law much more complex have become apparent as elected officials start to raise concerns about how much the revised program would help Texans.
Last week, the Senate approved Senate Bill 22, which would create the Texas Moving Image Industry Incentive Fund, guaranteeing a $2.5 billion incentive fund for film, TV, and online production over the next decade. Yesterday the House Committee on Culture, Recreation, and Tourism took up House Bill 4568, the House companion bill to SB 22.
“It’s good to have Texans promoting Texas,” glowed bill author Rep. Todd Hunter, R-Corpus Christi, waving towards Woody Harrelson and Matthew McConaughey, who were taking another day off from filming their upcoming series, Brothers to stump for the bill.
Texas already has a rebate, the Texas Moving Image Industry Incentive Program, but the issue isn’t nor has it ever been how TMIIIP operates. In many ways it’s regarded as the gold standard of incentive programs: a baseline 25% rebate on verified in-state spending for eligible projects that submit extensive and heavily reviewed accounts. With other states being seen as using incentive cash or transferrable tax credits in a desperate attempt to bring in any production, TMIIIP had proved its worth with an estimated $4.69 spent in state for every $1 reimbursed.
Shows and films either just bypass Texas or relocate for financially greener pastures.
So what SB 22 and HB 4568 do to get around that volatility is to locate TMIIIF outside of the regular budget cycle. Instead, it would be a special trust fund, outside of the treasury, and the comptroller will basically skim $500 million in sales and use taxes per biennium over the next 10 years. It’s constitutional, in a nod-and-a-wink kind of way, but takes everyone involved signing off on the fix.
And that’s problem number one. SB 22 may have Senate Finance Committee Chair Joan Huffman, R-Houston, listed as author, but it’s Lt. Gov. Dan Patrick pushing it. And yet it only passed the Senate on a 23-8 vote, with six of the nays being fiscal Republicans. That dissent could get even hairier on the House side, not least since the funding mechanism takes the whole endeavor out from under House Appropriations Committee scrutiny. This is by far the largest budget item the normally sleepy Culture, Recreation, and Tourism committee has ever handled, and more seasoned financial voices may have a thing or two to say about what’s being proposed.
SB 22 and its House companion also propose a shopping list of what are dubbed uplifts – extra goals that a project can achieve for extra cash. These uplifts are stackable, raising the rebate from that baseline 25% to a maximum of 31%.
• 2.5% for productions in a rural county.
• 2.5% for undertaking post-production in Texas.
• 2.5% for hiring veterans.
• 2.5% for what’s dubbed a heritage project, one that basically makes Texas look good and ignores all that awkward history. The rules for what qualifies for “heritage” will be defined by the Texas Film Commission.
• 2.5% for faith-based projects.
Oh, what, you didn’t think they weren’t going to find a way to drag this even deeper into the culture wars? This last little gem comes courtesy of Doug Deason, who Hunter name-checked while introducing the bill. That’s a name most familiar for his involvement with hyper-conservative policy groups like the Texas Public Policy Foundation, but now he’s started dabbling in media.
Deason didn’t speak, but the faith-based movie community did turn up, including Sean Doherty Sr., who claimed (and I am not kidding here) that the Lord sent him the business plan to found Sharpened Iron Studios in Amarillo.
Doherty claimed that he’s prepared to invest $350 million to build a 12-stage studio complex as well as housing and retail just south of Amarillo, and the only way he can make the numbers work is for TMIIIF to fill his sound stages. If that seems familiar to anyone, it’s because there’s a long history of subdivision projects, from Bastrop to San Marcos, that claim they’re going to be centered around a film studio and that never materialize. Or, if they do, the housing happens but the studio doesn’t.
And, cutting to the chase, does anyone really think that “faith-based” means anything other than hyper-evangelical Baptist, or maybe Catholic if the producers play nice?
But the uplifts are, ultimately, relatively minor points. There’s one number in the bill that could completely undo all the good work TMIIIP has done and turn TMIIIF into an accounting failure.
That number is 35. As in, 35% of all cast and crew must be Texas residents for a project to be eligible for TMIIIF funding. For most of the history of TMIIIP, that number was 70%, but it dropped to 55% last session, mostly at the behest of Patrick’s good friend Taylor Sheridan. The Yellowstone creator had often claimed that he just couldn’t get enough qualified crew in Texas for his projects. However, industry rumblings have been consistent that he’s not trying that hard, that he just likes working with his own people, and that even when Texans are hired that they’re in junior or very short-term positions.
Long term, that 35% will rise by 5% per biennium until it tops out at 50% in 2031, but that’s a long time where less than half the people on a Texas set are Texas residents. In a show of bipartisan concern, both Rep. Charlene Ward Johnson, D-Houston, and Rep. Helen Kerwin, R-Glen Rose, echoed earlier concerns from Sen. Judith Zaffirini, D-Laredo, when they homed in on that residency requirement. Hunter waffled a bit, agreeing that there was an issue there, that they were waiting for SB 22 to come over, and that he would be working with stakeholders on suitable new language that should assuage their concerns. (Behind the scenes, this is expected to be another of those 2.5% stackable uplifts.)
The reduced residency requirement could well blow a massive hole in everything that made TMIIIP the gold standard.
The big concern is that the drop to 55% will mean a considerable reduction in the amount of money going into the Texas economy and supporting Texas jobs. If that level does drop to 35% – half of what lawmakers are making their calculation on – the big question becomes whether the rebate will even be covered by the additional taxes raised. Even if that purported stackable uplift does materialize, if it’s only a 55% requirement it still throws all those calculations out the window.
The growing concern is that Texas could end up like Georgia, where a 2022 audit found that weak residency requirements and oversight meant that, rather than creating jobs and investment, their program only generated 19 cents per dollar of the $1.3 billion spent by the state every year.
So what happens if SB 22 fails to get out of the House, or the two chambers can’t agree on the details? Well, there’s always TMIIIP, and while all the attention is on TMIIIF right now, the tried-and-true jewel in the crown could end up being a tried-and-true fallback – at least, for the next two years.
This article appears in April 18 • 2025.
