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March 2009


JANUARY REVENUE (IN MILLIONS): SALES TAX: $1,937.3 OIL PRODUCTION: $44.8 NATURAL GAS: $107.3
MOTOR FUELS: $258.4 MOTOR VEHICLE SALES: $215.1 TOBACCO: $101.1


Around Texas

  • Texas is the nation’s top exporter for the seventh year in a row, according to a new U.S. Department of Commerce report. Last year, Texas exports totaled $192 billion, a 14 percent increase in exports in 2008.
  • H-E-B grocery has purchased more than 160 acres in Temple to build a 400,000-square-foot distribution center that will employ about 100 workers.
  • The University of Texas at San Antonio has received a $200,000 grant from the U.S. Department of Energy to study fossil fuel combustion, which should aid the design of more efficient reactors used to convert fuel to energy.

Lights,
Camera,
IMPACT!

by Karen Hudgins

Texas Film Industry Hopes to Ramp Up Incentives.

When Drew Barrymore’s directorial debut, “Whip It!,” a movie about Austin’s burgeoning roller derby scene, hits screens nationwide later this year, moviegoers will see very little of Austin.

That’s because after two days of shooting in the capital city in 2008, the film’s crew packed up and shot the rest of the picture in Michigan.

Michigan offers filmmakers a tax credit covering up to 42 percent of in-state production expenses. Texas’ film incentive program offers rebates equal to 5 percent of in-state spending.

Losing that movie represents $5 million in lost spending and $2.8 million in lost wages for Texans, according to the Texas Film Commission (TFC). Between 2003 and 2009, Texas lost dozens of film projects to other states totaling an estimated $1.4 billion in lost business and jobs.

Bob Hudgins, Texas Film Commission

“It’s very, very painful,” says TFC Director Bob Hudgins.

The TFC is pushing for legislation this session that will boost incentives. The state’s Moving Image Industry Incentive Program currently returns 5 percent of in-state spending for film and TV projects that spend at least $1 million and commercials and video games that spend at least $100,000. The TFC wants a program that could increase the 5 percent rebate for film and television production based on the appropriation from the Legislature, says Hudgins.

“People in the industry – from producers and those who do budgets on films, to studio and TV people – have all said our magic number is 15,” says Hudgins.

A 15 percent rebate would make Texas more competitive with film incentive programs offered in New Mexico and Louisiana, which offer rebates and tax credits of 25 percent respectively, says Hudgins.

“We’re trying to have a modest program that is sustainable,” he says. “The real key is longevity, not flash in the pan.”

A recent Comptroller report, The Current and Potential Economic and Fiscal Impacts of Texas’ Moving Media Industry, compares the film industry incentive programs of other states with the Texas incentive program and examines their respective economic impacts.

Third Coast Erosion

Film industry officials say a more competitive incentive program will help the state win back film projects and crews.

Years ago, Texas was so desirable for filmmakers that it earned the nickname “the Third Coast,” says Don Stokes, founder of Post Asylum, a Dallas-based film and video post-production facility.

“A real infrastructure was built up over the years, both on the theatrical side and non-theatrical side comprising TV commercials and business productions,” says Stokes, who is also president of the Texas Motion Picture Alliance. “Where we once had significant work on major studio projects and did more work for television series, we’ve seen that pretty much go away entirely.”

“Film crews are our biggest strength. The infrastructure, equipment, the businesses that support our industry and the diversity of locations we have – it’s kind of the perfect storm for us.”

– Bob Hudgins
director, Texas Film Commission

Texas’ multiple filmmaking assets distinguish it from Louisiana and New Mexico’s film programs, says Hudgins.

“We don’t feel we have to compete dollar for dollar for what they are doing,” he says. “Film crews are our biggest strength. The infrastructure, equipment, the businesses that support our industry and the diversity of locations we have – it’s kind of the perfect storm for us.”

Nearly 80 percent of the jobs associated with features shot in Texas are filled locally. That saves on housing, transportation and per diem costs, which on a normal 45- to 50-day shoot can cost up to $30,000 for a single crew member, Hudgins says.

Texas’ film crew base has eroded in recent years.

“By best guess, 25 percent of our union work force in Texas is now working in Louisiana and New Mexico,” Hudgins says. “If the work is in Louisiana, they will go to Louisiana.”

Los Angeles resident Christopher Johnson is a Houstonian who moved from Austin to Los Angeles in 1998 to pursue a career in film post-production work. He has primarily worked on documentaries.

“Three times now I’ve tried to move back to Austin,” Johnson says. “I’ve had to change those plans because there was either more work here in Los Angeles or a lack of work in Texas. In some ways I was prepared to have a reduction in work, but I wasn’t prepared to jump off a cliff.”

A MOVABLE FEAST

Amid a national economic slowdown, the 2009 Texas Legislature is facing a slew of requests. The nonprofit group Texans for Public Justice issued a report in December 2008 criticizing the state film industry’s push for more subsidies.

REEL IMPACT

Texas Media Industries’ Economic Impact

Estimated Production Spending (in millions)20062007200810-yr totals
(1999-2008)
Studio Feature Film$58.9$0.8$28.7$514.4
Independent Feature Film$14.7$11.9$15.7$97.3
Episodic and Other Television$69.5$72.5$34.2$325.2
Commercial, Corporate and Sports$86.5$92.0$123.6$804.5
Animation*$20.0$16.8$21.0$57.8
Video Game*$80.7$149.0$179.4$409.1
Total Estimated Spending$330.3$343.0$402.6$2,210.0

* The Texas Film Commission began tracking animation and video game production in 2006. Figures are rounded, and the totals are for three years from 2006 to 2008.

Source: Texas Film Commission

Hudgins says that unlike the oil, gas or cattle industries, the film industry can pull up stakes and leave.

“The film industry is totally portable,” he says. “You put it on trucks and it can go anywhere. Michigan popped up in April with a new program giving up to 42 percent. Within two months, they had 80 some-odd productions going there.”

Elizabeth Avellán is co-owner and vice president of Austin-based Troublemaker Studios, the production company she and director Robert Rodriguez founded in 2000. Troublemaker produced the “Spy Kids” trilogy, “Once Upon a Time in Mexico” and “Sin City.”

“It’s not a handout,” she says of incentives. “If the investors are getting $3 million or $4 million from somewhere else, I can’t make it $3 million or $4 million cheaper for them in Texas.”

Avellán says she can no longer hire Texas visual effects companies to work on her films.

SUPPORTING CAST

Estimated Job Totals

Type of Job200620072008Totals
Total Temporary Crew*6,7517,64637,18681,800   
Total Full-Time Jobs10,85413,20014,07738,131**

* This includes temporary jobs for studio and independent feature films, television, commercials, corporate and sports programs. The total is for 10 years.
** This three-year total includes full-time equivalent and permanent full-time jobs tracked beginning in 2006.
Source: Texas Film Commission

“We’re having to go somewhere else to get a bigger rebate. I can get so much more in Canada, even England,” she says.

“Troublemaker has projects, but they will not allow me to film them in Texas. We have two studios in Austin, Austin Studios and Troublemaker Studios, that are mostly dark right now.” (Read the full Q&A with Avellán and find out about upcoming projects at Troublemaker Studios in our Web Exclusive.)

The combined economic impact of film, TV, animation and video game production in the state totaled more than $2.2 billion over the past decade. (See chart “Reel Impact.”) Those sectors accounted for more than 119,900 jobs over the same period. (See chart “Supporting Cast.”)

Money is in TV

Episodic TV productions such as “Friday Night Lights” and “Prison Break” are huge moneymakers for Texas, says Carol Pirie, deputy director for the TFC.

A 22-episode regular season of “Prison Break,” which filmed in Texas for two seasons, brought in $35 million to $37 million a year.

“It takes a really huge feature film to spend that much money in Texas,” she says. “With episodic TV, you’ve got maybe 125 people who have fabulous jobs for nine months, not two or three months as you would from a film.”

The writers’ strike, which ended in February 2008, hurt the state’s film industry. “Prison Break,” which filmed in the Dallas-Fort Worth area, opted not to return to Texas in 2008. “Friday Night Lights” finished filming its season in November.

Video Games Flourish

Films historically do well during bad economic times as moviegoers seek an escape outlet, Hudgins says.

Video games, a fast-growing component of the state’s Moving Image Industry Incentive Program, could fare better than films during the economic downturn, Hudgins predicts.

“With movies, taking a family of four and buying popcorn, you’re spending up to $50 for two and a half hours,” he says. “With video games you spend $50. The basic run time on games is about a six-week period. It’s a pretty good long-term investment in your entertainment.”

U.S. sales of video game hardware and software rose 10 percent in November 2008 from a year earlier, according to market research firm NPD. FN


To read more about the impact of the state’s film industry, read the Comptroller report, The Current and Potential Economic and Fiscal Impacts of Texas’ Moving Media Industry, at www.window.state.tx.us/specialrpt/mmedia/ or call (800) 531-5441 to request a free copy.

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