Economic and Fiscal Impacts of Texas’ Moving Media Industry
For several decades, the state of Texas has operated a Film Commission and has also offered various incentives to the film and video industry. Though the dollar volume of media spending varies from year to year, in 2007, according to the Texas Film Commission, industry outlays approached $345 million. This spending generated a total state economic impact of about $522 million and supported 2,421 full-time jobs.
Today, the “moving media industry” is comprised of five major components: feature films, television productions, commercials, animation and video games. In recent years, the fastest-growing industry sector has been video games. In Texas, video game development currently accounts for more than one-third of all industry spending with commercials second. Veronis Suhler Stevenson, the industry’s leading information source, projects video games to continue as the fastest-growing component of the moving media business.
The recruitment and expansion of media production activities has become extremely competitive, and virtually every state has enacted specific fiscal incentives to attract and retain the media industry. In 2007, the Texas Legislature enacted the Texas Moving Image Industry Incentive Program that offers cash grants equal to 5 percent of qualified in-state spending on feature films, documentaries, television programs, commercials and video games. The Texas Legislature has authorized up to $10 million for fiscal 2008 and another $10 million for fiscal 2009.
An initial comparison of revenues with the costs of the new film incentive program suggests that the program operates slightly above a break-even point. Anticipated grant awards for fiscal 2008 are about $6 million, while spending on new production is estimated to generate about $8.8 million in state and local tax receipts. In terms of state revenues, tax receipts exceed outlays by about $232,000. There are also other real economic benefits to Texas from the presence of the media industry that cannot be easily quantified, such as the impact on travel and tourism.
Two growth scenarios are examined for the Texas media industry through the year 2011. Scenario one assumes the Texas industry expands at the same rate as the national industry, and scenario two assumes the Texas industry grows twice as fast. Under the first scenario, the moving media industry will generate about $623 million in state economic activity in 2011, support almost 3,000 jobs, and produce more than $10 million of new state and local revenue, of which about $7 million will accrue to the state. Under scenario two, economic activity from industry spending rises to $800 million, supports more than 3,700 jobs, and yields new tax revenues of $13.4 million with about $9.4 million going to the state treasury.
To achieve this level of activity in the film and video industry, the state may need to enhance its incentive programs. For example, the median tax credit/rebate level nationwide is 25 percent, well above Texas’ 5 percent rate. Additional funding for university and community college based-training programs in technology and the arts could also improve the state’s competitive posture. Finally, consideration should be given to leveraging the Moving Image Industry Incentive Program with the Emerging Technology Fund and/or the Texas Enterprise Fund as a strategy for bringing new video gaming companies to the state.