The Texas House on Wednesday passed on to the Senate a bill that would allow businesses with a live music venue to withhold a percentage of their taxes in the name of music preservation in Texas.
The vote drew almost no media attention. Support for the bill was exceptionally bipartisan, by recent legislative standards. And because of that, chances of it becoming law before the end of this 86th session of the legislature look good.
But by its very anonymity, the music incubator bill illustrates the near impossibility of keeping track of the costs of various pieces of legislation and why, by the end of a session, lawmakers in both parties struggle to settle on a budget that takes care of the state’s necessary business at a reasonable cost.
The “music incubator” proposal, House Bill 2806, is one of 7,315 bills filed in this session in one house or the other, according to Texas Legislature Online. With the exception of an unusually stingy session in 2017, the legislature over the past 10 sessions has typically passed between 1,300 and 1,500 bills.
The vast majority of them are financially modest, like HB2806, rather than the massive spending proposals like a property tax or school finance reform bill. Many of these bills provide something desired by the bill author’s home constituency, but at a cost borne by state taxpayers that adds up quickly.
State Rep. Geanie Morrison, a Republican from Victoria, introduced the music preservation bill last month to the House Culture, Recreation & Tourism Committee, describing it as a tool to slow the erosion of places to listen and dance to music, particularly in her district still recovering from Hurricane Harvey.
The committee heard from James Villafranca, who testified that his family’s Club Westerner has hosted hundreds of bands since 1956. Dance halls like his family’s have it tough these days, he said.
“These dance halls around Texas play a really, really important role to the musicians,” the Victoria club owner told the committee. “The dance halls also play a really important role to the community. It’s a place where we get to meet each other and mingle and understand each other.”
The bill has the enthusiastic backing of the Texas Restaurant Association, some of whose members would benefit from the tax rebate. “The program would help to save these dwindling venues by assisting with costs such as paying and booking live music acts, marketing and promotion, along with venue and equipment upkeep,” the association wrote in its bill analysis.
Morrison cited the Texas Music Office’s 2019 economic impact study that says the Texas music industry has an annual economic impact of $23.4 billion and and pays $390 million a year in taxes to the state.
Surely, diverting just a little of the mixed beverage taxes in the form of rebates granted by the state Music Office is worthwhile, Morrison told the committee.
“Music has been a major contributor to the culture of our state, especially live music in venues large and small, rural and urban,” she said. “Their disappearance is not only a loss for our Texas culture and heritage, but it is a great economic loss as well.”
The Legislative Budget Board estimated in its original fiscal note that tax diversion due to Morrison’s proposal would cost $116.6 million in lost revenue over a five-year period.
After Morrison agreed to reduce the rebate program to $50.5 million over the same five-year period, the committee voted unanimously April 11 to send the bill to the House.
The House passed the bill by a vote of 95-43, with all 43 of the no votes coming from Republicans.
“It had a bloated fiscal note,” Jeff Carlson, chief of staff for Rep. Cody Harris, R-Palestine, said. “With the budget as it is and all of the other things we could be spending that money on, Rep. Harris couldn’t support that bill.”
Carine Martinez, a policy analyst the Texas Public Policy Foundation, said the bill is another corporate subsidy of the kind her conservative think tank has been opposing for years.
“Every exemption or so-called rebate — here really a subsidy — implies that someone else, whether another business or Texan taxpayer, is going to have to compensate for lost revenues either in fewer services or in higher taxes, Martinez said. “The success of a business should depend on consumer demand and the value the businesses are creating for consumers — not on taxpayer-funded preferential treatments.”
Music venue owners in Austin would welcome lower taxes and lower rents, but those costs are accelerating, according to Rebecca Reynolds, executive director of the nonprofit Music Venue Alliance Austin. The rebate, should it pass, would be welcome, Reynolds recently told the Austin Monitor.
“When operating costs rise as quickly as they have due to increased rent and taxes, and audiences suddenly disappear, these businesses have to make the difficult decision to stop offering music or to close their doors altogether.”
Mark Lisheron can be reached at [email protected].