The Texas legislature considered, but has effectively tabled, a newly revamped tax and film tax credit bill that could have taken big-budget movies away from Georgia, which has some of the most generous credits in the world.
Instead, Texas legislators may instead boost its very modest existing program but not at any level that would make or break rival states.
A PSA video appeared on social media a few days ago promoting tax credits in Texas featuring big-name actors such as Dallas native Owen Wilson, Midland’s Woody Harrelson, and Uvalde’s Matthew McConaughey. Dennis Quaid produced the commercial, along with independent filmmaker Jeremy John Wells. (Quaid recently shot an Amazon movie in metro Atlanta “On a Wing and a Prayer” that benefited from Georgia’s tax credits.)
The current Texas tax credit system handed out just $45 million to film and TV production companies over the past two years. According to The Austin Chronicle, there are talks to increase that to $150 to $300 million for the next two years. While that may sound big, it’s a pittance compared to Georgia’s film tax incentive program.
Last fiscal year, TV and film companies spent more than $4.4 billion in the state of Georgia, which doled out more than $1 billion in tax credits. No other state handed out anywhere near that much. Why? Georgia does not cap its program, unlike most other states including Louisiana, New Mexico and New York.
This has drawn companies like Marvel and Netflix to create big-budget movies like “Black Panther,” “Spider-Man: No Way Home” and “Red Notice” in Georgia over the past decade with budgets exceeding $100 million.
Texas’s House Bill 3600 would have offered comparably generous tax credits as Georgia and would not have capped the program.
But The Austin Chronicle said some legislators were wary of creating a whole new program with big administrative costs and a potential billion dollar annual price tag. So after the bill passed the House Culture, Recreation & Tourism committee with bipartisan support, sponsor Rep. Four Price postponed the hearing before the full House last week.
With only a few days left in the legislative session, Price effectively killed the bill this year.
Texas once had a more generous tax credit system, but anti-Hollywood sentiment and budget cuts weakened its reach in recent years.
“Production goes where the money flows,” Wells told a Houston Fox affiliate recently to talk about his PSA. “If you have a state like Georgia or Louisiana, New Mexico, or like we joke about even Oklahoma has a stronger incentive than Texas.”
Randy Davidson, founder of Georgia Entertainment News, said the “Yellowstone” effect may be making Texas legislators more amenable to at least expanding its tax credit.
“Even if it’s not as aggressive as initially pitched, the mood is that Texas has got to diversify out of energy and agriculture,” Davidson said. “Until now, they haven’t talked about expanding the program in many years. But the Western drama theme is so prevalent in streaming and feature films nowadays. Montana, Oklahoma and New Mexico are getting them, not Texas.”
He said the more generous bill in Texas could return in future years and is now effectively in play.
Georgia’s TV and film tax credit can reach 30%, which means if a production company spends $10 million, they could get up to $3 million in transferrable tax credits back. If a company like Sony or Lionsgate can’t use it, it can sell that credit at around 90 cents on the dollar to a Georgia taxpayer or corporation seeking to reduce their tax burden.
The stalled Texas House Bill 3600 offered credits ranging from 30% to 42.5% for any production spending $15 million or more. In Georgia, companies that spend just $500,000 can qualify for the tax credit, which was created in 2008 and has turned the state into one of the largest homes to TV and film production in the United States, behind only California and New York.
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