Economic and Fiscal Impacts of Texas’ Moving Media Industry
The film industry in Texas began nearly 100 years ago when the New York-based Star Film Company moved to San Antonio in 1910 and produced more than 80 films in a year’s time. In 1927, the World War I movie “Wings” was made in Texas and won the first Academy Award for best picture. At the 1984 Academy Awards, seven of the top eight Oscar-winning films were made wholly or partially in Texas.
Over the past two decades, Texas has become a major location for feature and independent film production, television programming, commercials and video games. Though the dollar volume of media spending varies from year to year, in 2007 estimated spending in Texas by the film and video industry approached $345 million. This spending, in turn, boosted the state’s total economic activity, produced substantial labor income and generated new revenues for the state and its local governments.
As the moving media industry has grown and matured, Texas’ supporting infrastructure has improved as well. In 2003, the University of Texas (UT) at Austin established the UT Film Institute within the College of Communications to provide students with highly specialized experience in all phases of filmmaking, from pre- to post-production. Importantly, the Institute incorporates the most advanced digital technology currently available into all aspects of its curriculum. The Department of Radio, Television and Film at the University of North Texas is also recognized as one of the nation’s leading programs in film/digital production, documentary and media culture and industry studies. Degrees are offered at both the undergraduate and graduate levels.
In addition, the state offers a variety of sound stages and sets that can be used in the production of feature films, television shows and commercials. For example, Texas is home to more than a dozen studio facilities that range in size and function and are well suited for mid-level productions.
Attracting media production activities has become an extremely competitive sport. Virtually every state and territory in the United States has a film commission, as do more than 125 large cities. Canada, Mexico, Spain, Australia, the Czech Republic, Morocco and many other countries are also actively recruiting and supporting the film and video industry. And virtually every state has enacted specific fiscal incentive programs to attract and retain the media industry. (see Figure 1)
Production Incentives in 2008
Source: The Walt Disney Company.
For years, Texas has offered sales tax exemptions and a waiver of the hotel occupancy tax for stays of 30 days or longer to film and video producers. But in the face of a more aggressive posture by other states, the Texas Legislature in 2007 enacted the Texas Moving Image Industry Incentive Program with the express purpose of making the state more attractive to media producers.
This program, which became effective September 1, 2007, offers cash grants equal to 5 percent of qualified in-state spending on feature films, documentaries, television programs, commercials and video games. Both live-action and animated projects are eligible, and some producers may also claim sales tax exemptions on a variety of items and services used in the image-making process. Up to $10 million in grants has been authorized for fiscal 2008 and another $10 million for fiscal 2009.
The enabling legislation requires the Comptroller of Public Accounts to assess the fiscal effectiveness of the program. To that end, this report first summarizes current trends in the media industry and how Texas compares with other states. It then examines the current and potential economic and fiscal impacts of the media industry in the state of Texas and compares new state revenues with the estimated amount of cash grants to be awarded to the moving media industry in 2008. Following the fiscal impact assessment, the report presents a discussion of strategies the state may wish to consider to help stimulate the industry and improve Texas’ competitive position in the marketplace for the production of film and digital media.