Texas lawmakers signal openness to expanding the film incentive program. San Antonio could benefit from this

During a legislative hearing that featured clips from television shows filmed in Texas and testimony from movie stars like Dennis Quaid, lawmakers considered whether a film incentive program that has lured hit productions like “Yellowstone” and “Friday Night Lights” to the state should be revised.

Film industry professionals told lawmakers that Texas’ diverse topography and low cost of living offer creative professionals an ideal location for filming. But they said better incentives in other states are drawing their projects away from Texas, hurting their projects and costing the state millions in potential revenue.

“One of my biggest disappointments was that I wrote ‘Hell or High Water’ and they shot the damn thing in New Mexico,” said writer-director Taylor Sheridan. “My love story to Texas was filmed west of where it should have been filmed.”

The program, created for 17 years under former Gov. Rick Perry, attracts television, film, advertising and video game production to Texas by offering grants for eligible expenses, including the cost of hiring Texas workers and renting film space. Film and television projects filmed in Texas receive a discount of 5% to 20% – but only until the program runs out of money each budget cycle.

Lawmakers have funded the program in varying amounts over the years. Last year, lawmakers appropriated a historic $200 million over two years, a significant increase from $45 million in the previous two-year period.

Gov. Dan Patrick directed the Senate Finance Committee to examine how effective this investment has been in stimulating the local economy and encouraging job creation. The committee is also tasked with reviewing other states’ programs and determining how to make Texas’ program more competitive. Lawmakers expressed pride in the program’s return on investment and expressed interest in making the program work better for filmmakers.

However, they noted that since Texas has no state income tax or state property tax, a tax break wouldn’t necessarily make sense. The state would have to consider a different model that would create a long-term financing plan.

But some senators worried that increasing stimulus for Texas could lead to a negotiating war.

“I just think we’re naive,” said Sen. Charles Perry, R-Lubbock, adding that states “threatened” by Texas could try to create a stronger stimulus. “We have to be aware of that.”

According to Adriana Cruz, executive director of the Texas Economic Development and Tourism Division of the Governor’s Office, the current incentives have resulted in a 469% return on investment. This means that for every dollar spent on the program, $4.69 is spent in Texas. The program also created more than 189,000 jobs and more than $2.5 billion in government spending, Cruz said.

New Mexico has one of the largest incentive programs in the country, offering 25% to 40% reimbursement. Other states with robust programs include Georgia, which offers a 30% tax credit with no cap.

Other projects reportedly pulled out of Texas due to better incentives elsewhere, including Richard Linklater’s “Hit Man,” which filmed in Louisiana, and “Fear the Walking Dead,” which moved to Georgia.

“Not knowing how much incentive there will be in the third year makes it really difficult,” Sheridan said. “What would be very helpful is some clarity and understanding and some reassurance that this thing is not going to go away.”

John Fleming, dean of the College of Fine Arts and Communication at Texas State University, noted that 70% of graduates of the school’s film program said they left Texas because there were no job prospects in the state. And 96% of those graduates said they would want to return to the state.

Chase Musslewhite, a Texas film producer who co-founded Media for Texas to advocate for the film industry, said experts have found that incentives above 45% are not practical. She suggested the state consider a franchise tax credit or a constitutional amendment to create a dedicated fund, similar to the Texas Energy Fund.

Film incentives in San Antonio

The City of San Antonio Department of Arts and Culture is offering film incentives of up to 7.5%, which when combined with state incentives could potentially increase the total rebate for filmmakers to up to 30%. But for some filmmakers, that’s still not enough appeal.

Executive Director Krystal Jones said the department supports “maintaining or increasing the level and consistency” of state funding allocated to its program to avoid unpredictability and uncertainty for film producers considering Texas as a location.

Jones acknowledged that Texas has missed opportunities for more attractive incentives in other states and territories and reiterated that her department is “working with industry leaders who support a more consistent, increasingly environmentally friendly source of funding.”

Uniformity at the state level would benefit filmmaking at the local level, said Paul Ardoin, director of the film/media program at UTSA. “The aim is for local incentives to move production to South Africa as soon as government incentives move production to the state,” he said.

Ardoin said that “it would be a dream for many of our students to find consistent and rewarding work on major Hollywood-style productions.” However, not enough productions have chosen to film in Texas, he said.

Large-scale productions tend to “follow the incentives,” Ardoin said. “We’re definitely making progress in that direction, but I’m not sure we’ve reached the tipping point that would really open the floodgates.”

During the recent production of the Paramount+ “Yellowstone” prequel series “1923” in and around San Antonio, several UTSA students participated as extras, Ardoin said.

The aim of the program would be to engage students in vocational training opportunities in larger productions and to “increasingly ensure that the South African workforce benefits”.

Nicholas Frank contributed to this article.

This article originally appeared in The Texas Tribune, a member-supported, nonpartisan newsroom that informs and engages Texans about the state’s politics and policy. Learn more at texastribune.org.

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