The Coen brothers' film True Grit was a beneficiary of a state program for film incentives.

Movies

How Lawmakers Will Try to Kill the Texas Film Industry

Three bills proposed for this legislative session would end a program that gives incentives to in-state movie and TV productions.

Less than two years ago, a bill in the Texas Legislature proposed ending a program that brings television, video game, and film productions to the state with taxpayer-funded enticements. It failed to pass, but legislators did put a 66 percent dent in the state’s budget for such incentives, chasing some filmmakers out of town and pushing Hollywood back west — with a little movie magic, New Mexico makes a passable stand-in for rural Texas.

That was bad enough news for the Texas film industry. Yet, as any moviegoer will tell you, the sequel is almost always worse.

With the legislature convening this month, several lawmakers will again try to kill a program that has helped produce television shows like Friday Night Lights, and films including the Coen brothers’ True Grit.

One bill in the Texas house, introduced by state Rep. Matt Shaheen (R-Plano), and two in the senate — courtesy of state Sens. Konni Burton (R-Colleyville) and Bob Hall (R-Edgewood), respectively — each propose abolishing the moving image incentive program, which underwrites up to 20 percent of production costs for films and television shows made in Texas. Two of the bills, Shaheen’s and Hall’s, would also do away with the Texas Film Commission itself.

Supporters of such incentives make the case that the benefits of in-state film production are not only cultural, but economic. An oft-cited example is that of the television hit Breaking Bad, which has been credited with a “small economic boom” in Albuquerque. Closer to home, the Morning News reported in November that a $200,000 city grant for the Dallas-based production of the second season of the USA drama Queen of the South is projected to generate about $475,000 in tax revenue, with the production itself expected to spend up to $21 million going toward “crews, hotels, restaurants, property owners renting out locations, off-duty cops, audio and video rental companies and so on.”

The Texas Film Commission has connected $168.4 million spent in incentives “to the creation of nearly 20,000 full-time jobs and $1.14 billion in spending.”

Meanwhile, critics argue the money would be better spent elsewhere, although for Shaheen, the Collin County representative who is behind the house bill for this upcoming legislative session and who first unsuccessfully tried to end the program in 2015, there are moral as well as economic reasons.

Speaking on the phone Thursday, Shaheen conjured an almost cinematic image: a single mother, working multiple jobs, buying baby formula at the store and paying a sales tax that goes toward film projects with content “the majority of Texans would find objectionable.”

He named Mongolian Death Worm, a 2010 SyFy television movie, filmed in Texas, about a drilling operation disturbing an angry nest of ravenous subterranean creatures near — spoiler alert — the tomb of Genghis Khan. In the past, Shaheen has decried actors “with polarizing stances,” such as Sean Penn and Matt Damon, for taking incentives, and therefore the money of taxpaying single mothers, to make films here.

“I’m taking money from them, from that that mom, and I’m giving it to somebody that probably has a higher income than that mom, and that’s not fair,” he said. “It’s not an appropriate role for the government. I really want to leave that stuff to the marketplace.”

Shaheen said the state should instead focus funding on issues including education, Child Protective Services reform, and infrastructure. He disputed reports touting the benefits of states subsidizing film production, arguing that most of the jobs created are part-time and that film incentives could be turned instead into tax cuts for the private sector, which he said would in turn lead to more economic growth.

With 35 states using some form of tax credits for films, competition for major studio productions remains fierce. This is in spite of what’s been described as a “nationwide campaign” by Americans For Prosperity, a conservative political advocacy group supported by the billionaire Koch brothers, to weaken such incentives. Peggy Venable, the Texas policy director of Americans For Prosperity, has told the Texas Tribune that the film industry should not depend on state funds.

The group has had success in places like Florida, a state whose formerly healthy film industry, once reputed to be the third largest in the nation, is now either dying or something close to it.

However, Shaheen said films, commercials, and shows would continue to be produced in Texas without the incentives.

“Texas has so much to offer, we don’t need some government program to promote it,” he said, pointing to Whataburger commercials and to Dallas, the popular TV program that aired years before states began luring producers in with rebates, which began in Louisiana in 1992.

The television drama Queen of the South will film its second season in Dallas. (Photo by: Benedicte Desrus/USA Network)
The television drama Queen of the South will film its second season in Dallas. (Photo by: Benedicte Desrus/USA Network)

But after 2015 cuts slashed a $95 million two-year budget for production incentives to about $32 million, Texas is already falling far behind states that can offer filmmakers better deals, said Janis Burklund, director of the Dallas Film Commission.

“Texas is losing a lot of jobs because we can’t compete,” she said.

(There is also competition within the state. Austin is the heavyweight, but cities like San Antonio have invested in film incentives.)

While abolishing the program wouldn’t kill the Dallas Film Commission, which is financed by the city, it would make it even more difficult to bring in the kind of big projects that enlarge Dallas’ cultural profile, as well as its tax base, Burklund said.

Governments’ return on investment for film and television productions comes to almost $5 generated for every $1 spent in incentives, she said. Television and film industry jobs created in the area remain steady as long as crews can count on consistent work, which is not a guarantee with the state “waffling” on the program.

If the big projects leave for states offering more generous funding, the economic benefits will follow. The jobs and workers, not often the Sean Penns and Matt Damons of the industry, will follow. Homegrown writers, directors, and actors may not be far behind.

Losing already meager incentives would do further harm to the fortunes of emerging local filmmakers, who should be able to rely on the infrastructure, crews, and other resources — “the talent” — brought about by larger productions, Burklund said.

Even before the most recent cuts, Dallas filmmaker David Lowery shot most of his 2013 feature Ain’t Them Bodies Saints in Louisiana, known for its open-handed incentives. (And none of this is taking into account a provision that allows the Texas Film Commission to deny incentives to projects that portray “Texas or Texans in a negative fashion,” as happened with Robert Rodriguez’s Machete.) Lowery, it should be noted, is nevertheless doing just fine.

Regardless of the bills making their way toward this legislative session, which begins Jan. 10, the Dallas Film Commission will be looking ahead to the state budget appropriations process, and to drawing producers to town during the upcoming television pilot season, Burklund said. The USA show Queen of the South, over the objections of at least two City Councilmembers, will stick around and film its second season here.

Other lawmakers, and Gov. Greg Abbott, have expressed their support for the incentives program, while Texas filmmakers and audiences tired of seeing their home state portrayed by New Mexico and California can always call or write their district’s elected officials.

Shaheen, for his part, made it known that he enjoys watching movies and television, despite his opposition to state subsidies for productions. He and his wife have lately been “binge-watching” Frasier.

One of his favorite shows, he said, is Friday Night Lights, the acclaimed high school football drama that received about $6.7 million in incentive funds for filming in Texas.

Comments

  • I want this to make sense, but the numbers quoted are all over the board:

    “a $200,000 city grant for the Dallas-based production of the second season of the USA drama Queen of the South is projected to generate about $475,000 in tax revenue”

    238% ROI, I’m inclined to believe this is the top-end of what actually happens.

    “The Texas Film Commission has connected $168.4 million spent in incentives “to the creation of nearly 20,000 full-time jobs and $1.14 billion in spending.”

    -56% ROI for the portfolio ($1.14B x 8.25%). Don’t know the time-frame, so this could be less terrible if annualized, but still bad. The state probably captures more than sales tax, but I doubt that pushes this into positive territory.

    “Governments’ return on investment for film and television productions comes to almost $5 generated for every $1 spent in incentives, she (Janis Burklund) said.”

    500% ROI. I’m highly skeptical of this number.

    If this is revenue neutral of better as a whole, then I’m all for it. We do want to enhance the cultural life of our state and foster a diverse economy. It is a more difficult discussion if it is competing with other programs for funds without a positive return. In that case, you have to look at all the other cultural programs to which the state contributes and make judgments about their relative merits.

    • Ox-Bow

      ^^^….and this is why accountants don’t make good directors. If they cannot put it in calculated figure, its not worth it. If your left brained that just how you think, I get it. But us right brained people see value in art that can’t be boiled down to only numbers.
      From a marketing perspective, you may be correct, but from a PR perspective, you are dead wrong.

      • I’m no accountant and I’m not saying it has to make financial sense. If it doesn’t make financial sense, it has to be evaluated on a different scale, against other artistic programs on their cultural merits. This is pitched as an economic development program, but it doesn’t appear to work as one. If it is an investment in art, then you have to make your argument on artistic grounds. Are these great movies, ones that raise the cultural literacy of our state? That enable storytelling that otherwise wouldn’t be possible? Again, what’s referenced in the story is all over the board. True Grit, yes. Friday Night Lights, I think so. Mongolian Death Worm?

        • Ox-Bow

          Fair point. But I think you either support film or you don’t. The quality can be debated by critics, not legislators. Healthy soil is healthy soil, you can pick out of it whatever you want. And I would submit that a film like “Mongolian Death Worm” and the process to make the film (pre through post production), distribution, and finally whatever is on the screen with Dallas as a backdrop, still promotes and supports the city and Texas to the world.

          • adrian mcdonald

            You can support film and oppose film incentives. As for PR, there is no requirement that Texas be featured in the project in any way. Frankly, with the portraying Texas in a negative light issue, productions are more likely to not portray Texas at all. The two top recipients of the grant in the last report were Free Birds (the animated film) and Predators, both set in completely fictional locations. American Crime, when it shot in Austin, was set in California. Most audiences believe what they are watching is the place where the plot is set, not the place it may have been filmed. Hence, Cheers still sends throngs of tourists to Boston even though they never filmed a frame outside LA.

    • adrian mcdonald

      The $5 for $1 figure supporters toss around is the economic impact. Every $1 spent by the state generates almost $5 of private economic activity. She is not referring to the ROI for the public–the taxpayers–is different. The most recent report done by UT in 2014 showed that the state got back roughly $16 million in new tax revenue from productions spending and its subsequent indirect impacts in the state. But to realize this, the state paid out $75 million (at that time)–far more than the the return.

  • John C

    Most developed nations don’t have a problem with tax financing for films and do not have the ridiculous “moral” restrictions mentioned in the article. If morality is the basis for refusing grants or tax incentives, that would surely eliminate greedy insurance companies who want to relocate to Texas, big pharmacy, banking (looking at you BofA, the foreclosure king) and a host of other industries. This is no more or less than an attempt at censorship. And a silly one at that.

  • Is this guy really going to put this on the back of working single moms? Am I really supposed to buy the idea that he’s going after this economic incentive program because he wants to protect women in TX?! This is the most ridiculous thing I’ve ever heard, and an obvious lie and it needs to be called out. Mr. Shaheen, if you really give any care to the working single moms in TX, how about expanding Medicaid, funding Planned Parenthood and other women’s health programs, introducing a living wage, and equal pay legislation?! Oh,yeah, and how about some good early childhood education and affordable childcare?

    • adrian mcdonald

      With what money? All those wants cost money. So the question is: should the state hand out money to Hollywood studios or use it for core services?

      • Will they use it for core services? And, if it’s bringing jobs, then is the money being pumped into the economy some way? It would be a different story if they promised to direct the funds directly into a “core” service.

        • adrian mcdonald

          They’re going to use it for something. Let’s say they use it on transportation construction projects. That too would create jobs and pump money into the economy. Money spent almost anywhere is going to have an economic impact, not just money for films. Sure a film will spend lots of money at lots of places….but so do normal people. I shop at clothing stores, electronics stores, dry cleaners, restaurants and so on…but where is my free money??

  • blueoval429

    The best thing I’ve read in a while. Could be a Science Fiction movie: “Conservative Texas Republican concerned about a single mother working two or three jobs to feed her child while greedy Hollywood types feed off her taxes”.

  • Bill Carson

    I’m not crazy about these targeted tax breaks. They fund lobbyists
    and legislative corruption, expanding congressional authority to create all
    kinds of legal carve-outs for contributions and kickbacks. They generally benefit
    large over small businesses, with every industry who can afford it lobbing for
    similar exemptions. Also, they’re considered corporate welfare, and used to
    justify general welfare.

  • akear

    It is strange how people will vote against their own self interests. A film industry not only brings in money, but also prestige to the area it is being filmed in. Look how the Film industry has benefited Canada, which now has a larger special effects industry than America. The economies of Montreal and Vancouver have flourished as a result. It is not just the film industries that gets the benefits, but industries like hospitality, graphics, and construction.
    There are now more studio facilities in Canada, Australia, and New Zealand than Hollywood. It is almost impossible to find a major special effect movie made in America. If you thought things were bad in the auto industry, nothing has suffered the devastation of the US special effect and film production industry has. I guess Texas will join Hollywood in the rapid decline of the US entertainment industry.