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What The Film Incentives Program Means to The Texas Film Industry

Rooster Teeth CEO Matt Hullum takes a quick break from directing ’Lazer Team 2’ to talk about the future of the film incentives program.

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A production photo from the Alpine set of Rooster Teeth's 'Day 5'
courtesy Rooster Teeth

Earlier this month, the Texas House voted to reduce the amount of funding in the state’s film incentives program—from $32 million, split over two years, in 2015 (down from a previous high of $95 million, split over two years, in 2013) all the way down to $0. The Senate version of the bill—which currently allows for funding up to $3.4 million, also split over two years—slashes the incentives program, which began fairly robustly in 2009. The program offers a cash grant for a percentage of the cost of some of a project’s expenditures in the state (between 5 to 20 percent), including certain wages paid to Texans.

Filmmaking is an expensive business, and $1.7 million a year—if that’s indeed where the program lands in the budget—is miniscule when compared to states like New Mexico (which caps its program at $50 million), Louisiana ($180 million), and Georgia ($504 million in 2015, the most recent year data is available).

Those incentives are key to keeping film, television, video game, and other kinds of production in Texas—and in states where those incentives flow, it tends to benefit the overall economy. Fact-checking website Politifact determined that the economic impact of film production in Georgia was somewhere between $3.1 and $6 billion, depending on the model used to determine that impact. The result has been the creation of massive, permanent production facilities in the state. Marvel and Disney now base much of their production near Atlanta, bringing in more jobs for Georgians.

Texas doesn’t have production facilities on the scale of Atlanta’s Pinewood Studios, but there are full-time production houses here. One of them, Austin’s Rooster Teeth, employs more than 250 full-time staff, creating digital content (the long-running webseries Red vs. Blue, the award-winning animated series RWBY), television (the drama Day 5, the comedy Crunch Time), and feature films (2015’s Lazer Team). The company is currently in production on both the second season of Day 5—which is filming in Alpine this week—and the sequel to Lazer Team, in co-production with YouTube. We caught up with Rooster Teeth CEO Matt Hullum during a dinner break from directing Lazer Team 2, to explain what the incentives program actually does.

Dan Solomon: A lot of the debate around the incentives program revolves around the idea that it’s essentially welfare for Hollywood. You’re not a Hollywood guy, neither are the people who work for Rooster Teeth. What do you think of that framing of the debate?

Matt Hullum: What’s critical to understand is that an incentives program makes a stable work environment for film and TV here in Texas. So it’s not California people who are working on the movies. Everybody in this room is a Texan. It’s all Texas people. When the government’s not supporting the program, then the work is inconsistent, and then people—and that tax base—move away. That’s the thing that it does—it’s not just stimulating the economy on a per-movie, or per-show basis, which it does, it keeps people employed in Texas, and staying in Texas. When the money goes away, and TV shows and movies and the things that we do go away, professionals who live and work here say, ‘Well, I have to go where the work is.’ And once we lose momentum it’s really hard to recapture it, because we don’t have a network of professionals anymore. When the professional tradesmen and women, craftsmen and artists, leave the state, if we do start it up again later you’re back to square one. We don’t have an industry here anymore.

DS: When you need to go into production, does that make it harder to hire Texans?

MH: Oh, yeah. Absolutely. You end up hiring people from out of state, and a lot of them come in and they work, and then they leave, right? When things are rolling, and there’s a lot of work and lots of activity, then people stay here. They put down roots, and they’re not going anywhere. Because a lot of people want to stay here and work. There are a ton of people working on Lazer Team 2 that worked on From Dusk Till Dawn and AMC’s The Son [both of which were shot in Texas]. It’s all the same people. Everybody’s agenda is stay here and work and provide really a stable industry that’s going to generate revenue and generate tax dollars in the state, and more money for other ancillary businesses that touch this one, which are a lot of businesses. As soon as it goes away then people are like, ‘Well, I gotta eat. I’m going to where there’s a show.’ And then when you try to start it back up it’s like that person you relied on last time is not there anymore.

DS: Do you end up fighting for crews?

MH: Yeah, you do. There’ve definitely been times in the past when the amount of people here was too thin, because the state wasn’t supporting it, and productions that wanted to come to Texas couldn’t come. And it wasn’t just about the incentive dollars. They couldn’t come to Texas because there were no more workers left, and the reason there were no more workers left is because they had to move because the state didn’t support it. So it really is a cycle. If we want to keep more productions coming in and spending their dollars here, whether they’re coming from L.A. or New York or wherever, we have to have Texans here who are working.

DS: What did you think about the House’s vote to zero-out the film incentives program budget?

MH: There’s a political wave right now that says, ‘Let’s cut everything that’s not the military,’ basically. I just think it’s cutting off your nose to spite your face. It’s not just about the arts, which I do think is a valuable thing to support, for the sake of our culture and who we are, but it’s also just an economic no-brainer. It puts more money back into the economy. It stimulates more population growth in Texas of people who make good livings and pay a healthy amount of taxes and who buy things and move the economy along. So to not do it is a lose-lose for the arts and the Texas economy. I feel like the political mindset is, ‘We don’t even care if it hurts the economy as long as it hurts the arts.’ I think the message that zeroing out the funding sends is that we don’t even want you guys here anymore. It feels hostile.

DS: What made you guys decide to do Day 5 in Alpine?

MH: Our goal, honestly, is to shoot as much in Texas as we can. We don’t want to go outside of Texas if we don’t have to. That’s another great thing about Texas: there are so many different types of places, because it’s a big state. From a huge metropolitan area to rural areas to small towns to suburbia. A place like Alpine that’s mountainous. But at the same time, New Mexico has similar locations that would work pretty well, and right now there’s a lot of people we could tap into living and working there. It’s not our preference. Our preference is to stay here.

DS: Besides it being home for you and having diverse landscapes, what is it about Texas that makes it such a great place to film?

MH: Well, it’s an attractive place to be because the mindset and mentality here is there are no limits. Things are open. You can try new things. You’re not going to be in a Hollywood bubble. There’s a spirit of what Richard Linklater and Robert Rodriguez or Jeff Nichols have done, where everybody’s not doing stuff that you really see in Hollywood. It’s outside of those bounds, which I like because it speaks to the character of Texas. You can break some Hollywood rules here, but you need a stable base of professionals, or you can want to come move a big production here, but you’re going to need the ten best carpenters in the area, and there are only three. Then you can’t bring your production here, because there just aren’t enough people to work. That’s the tough one.

DS: We’ve seen Texas-set productions such as Hell or High WaterMidnight, Texas, and Preacher shot elsewhere. Do you think the people who are still making things in Texas are people who make a special effort to keep their production here?

MH: I absolutely do. You have to go a little bit out of your way because you love being here and you want to be here. I think there are also a lot of people who fight to get their productions here because they think they’re going to be able to make something they couldn’t get somewhere else, in a more rigid system. So they might make some exceptions. ‘This is not exactly the right place, or maybe a couple of the crew is a little more green than I wanted,’ but they’re willing to try stuff. People love shooting here. There’s a lot of sunshine. There’s lot of environments. Also, Texas is a right-to-work state, so some productions are union and some are non-union. There’s a lot of digital production that could take place here that’s smaller and non-union. We do some of those things, and then we also do bigger things like this that are union. So there’s a lot of different layers of possibilities. Whatever side of the aisle you’re on politically, it’s not black and white. If you’re pro-union or anti-union or whatever, I don’t think that that has to be an impediment thinking about the funding because there’s just so much going on. We could be the first home for digital production. We could outpace California or New York because we do have more flexibility, and we do have the mindset of experimenting and trying new things, but we’re not going to build new economies or even develop the ones we have a nascent grasp on if we’re being hostile to the people who want to build them here.

DS: You’ve built a company from four people to one that employs almost 300. You’ve only used the incentives program a handful of times to help get over a hurdle. What could a more robust, well-funded version of the program do for you at this point?

MH: Instead of making one movie a year, we’d make three or four. All of the people we hire on contract for maybe nine months of the year would be full-time.

DS: What are some of the ways that production benefits the economy that people don’t necessarily think about?

MH: Every department here probably touches twenty other independent businesses, from catering the food to buying stuff at the hardware store to wardrobe. If you go to Atlanta, it’s really interesting. My aunt lives in Atlanta. She has a furniture store that sells mid-century modern furniture. Her business was doing okay, but then when the film program went nuts, her business went nuts. And she sells furniture. The reason her business went nuts is they started renting her furniture from her for films. She bought a new car. So often you don’t even know what it’s going to be. Someone called me from Central Market yesterday and said, ‘Hey, I guess I’m seeing Lazer Team crew over here, because a bunch of guys came in and bought 50 pounds of dry ice.’ There are always these weird, tangential things like that. It permeates. I think the mindset of the entertainment spending is that it goes into the pocket of a sleazy producer or something. That’s just not it. Nobody is dipping their hand in the piggy bank. It’s not about that.

DS: How big is your crew in Alpine?

MH: They’re probably around fifty or sixty people. They’re staying in hotels, and some are in apartments. They went on a shopping spree buying boots and cowboy hats out there. It’s a long shoot—they’re out there for two and a half weeks. There’s going to be a big camp scene shooting soon, and they’ll use local extras. They’re buying stuff out there, and they’re bringing in people who actually live there. It’s just a big, cool thing. I’ve been working in film since 1995, and I’ve been back and forth between here, L.A., Atlanta, New York, Vancouver—I’ve been all over the place, and I would much rather be in Texas. I know a lot of people feel the same way, but the work goes away when the state doesn’t support it. Let’s just not do that again.

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  • Dominic

    Nice read, thanks for posting this. One correction though. His name is Matt Hullum, not Hollum.

  • Tejasguitarman

    I hope that Texas legislators will see the benefits of film making here.

  • msmith

    Here’s an economic no-brainer: If your profit margin is dependent upon government handouts, you need a better business plan and a new CFO.

    • 11215

      Then I’m assuming you feel the same way about the Texas gas and oil industry, farming and tech?

      • msmith

        That would be a faulty generalization. I was commenting on this article. I’ll provide input on other industries in comments for their respective articles.

    • fitzfilmfx

      True. Every independent study of film subsidies finds that the state loses money or at best breaks even. Louisiana is losing money hand over fist right now with their incentive program.

  • WakeUp

    Here’s the problem with the whole situation, even in this article: This is not an INCENTIVE program. The program does not entice film production to come to Texas by “handing out money”. It is a REBATE program. Productions HAVE to hire 70% of Texas residents (cast and crew) and ONLY receive rebates on purchases and rentals from Texas vendors. The money is flooded into Texas FIRST, then upon meeting all requirements, a REBATE is given back to the production company. MONEY COMES IN FIRST. Even our government officials don’t know this and that is why the “incentive” program is dying. Just change ONE WORD. It is the Texas Film Rebate Program. Spend money first, get a percentage of money back (usually 20% of ONLY Texas labor and spend). Look at Atlanta. When television shows shoot in Texas and spend $6 million an episode, at least $4 million is spent on Texas labor and local vendors. In this scenario, “Hollywood” gets $800,000 and TEXAS workers and vendors get $3.2 million. If no film production comes to Texas then “Hollywood” goes to Georgia and Texas gets $0. More money spent in Texas equals more taxes paid in Texas equals everyone in Texas wins. Wake up.

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  • Francois Larosa

    Wakeup’s comments are on the Mark. As a Filmmaker here for now 10 years-(Francois Larosa), I stop trying to rely on this. I sold my cars, did PPD’s studies, sold equipment, was living out of my truck when I first started my company, “Starfield Productions”. I pay all my Cast/Crew/Entertainment Lawyer/Production Insurance-(Joe Farris)/Locations-(Thanks Texas Film Commission)/pay for logging/Food/Transportation/Equipment-(Thanks Omega Broadcasting). When I sell to a distributor, I get paid at the tail end. I own it all, but its a hard profession. Its now since last year where Im now being outsourced to Direct LA Films here. Even if I was gonna try to get a Rebate, its not user friendly. I’m embarrassed, and shake my head that we have dropped the ball on this. We have been advocating for this for years now, and it continues to go on deaf ears. I try to get distribution financing on my own, and now its been working. But, easy, its not. Good luck to those that are graduating in this business.