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Texas Gov. Signs Entertainment Industry Incentive Bill
by Kris Graft [PC, Console/PC]
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April 23, 2009
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Governor Rick Perry of Texas signed today HB873, a bill that will give game developers more incentive to conduct business within the state.
The Entertainment Software Association lauded Perry's decision, as the bill, in part, intends to encourage growth of the games industry in Texas, which is home to about 90 game development companies.
Perry's signing of the bill will come just a few weeks after ESA head Michael Gallagher published an op-ed in the Austin American-Statesman that singled out Texas as falling behind the interactive entertainment curve.
But Gallagher today called Perry's actions, which allows game developers making projects of $100,000 or greater to receive a payment 5% of the total Texas-based expenditure -- up to 7.5% if 'under-utilized areas' are used -- "quick and decisive."
HB873 pertains to Texas' Music, Film, Television, and Multimedia Office -- the bill extends beyond video games.
In an analysis of the bill, Democratic Representative Dawnna Dukes acknowledged that Texas "has fallen behind other states in attracting moving image productions." HB873 is meant to rectify that shortfall by increasing the size of the grants for eligible productions, and lowering the requirements of grant eligibility.
The ESA cited a Texas report that pegged the state's video game industry value at $149 million, a figure the trade group claims "[far exceeds] all other entertainment ventures, including studio feature film, television, animation and commercials production."
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Texas is offering tax breaks with a minimum spent of $100k on the game project. Oklahoma's Minimum is $500k with restrictions based on ratings.
Looks like I will be writing an email tonight.
Texas is doing exactly what you suggest and not doing what you condemn. So what are you saying?
What Texas is doing is cutting you a check straight out of their Treasury department. There is a big difference. With that, by choosing to open a studio in Texas, the taxpayers are giving you money that otherwise could have been used elsewhere.
Regardless, it is nice to see cities, states, and even whole countries attracting developers this way. (Canada was represented well on the GDC floor this year.) Time for me to get Nebraska on board.
That money does not go to you just for opening a studio. You have to file the application for it at the end of each tax year. You have to prove that you meet all the requirements to qualify for the cash. So while yes, they are handing out a check, but it is only after you have spent a minimum of $100k for the year with 70% of you workforce residents of Texas and whatever other requirements they have.
So by the time you apply for the money, you have already paid business taxes. The employees have already paid income taxes. You have already paid utilities and other bills.
So in the end, this is money you get for paying taxes and spending money in Texas. Not just for moving to Texas.
Again, the details get complicated, but the net effect acts in the same way as a tax break.
The reason the bill is smart, is because it doesn't just give a tax break for developers in Texas, you only get something back for the money that stays in Texas. You don't get re-imbursed for a portion of funds you use to pay an outsourcing company in India, for example.
It's a pretty clever way to encourage companies to keep most of their dev cost and money in the state.