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Proposed Tax Break for Clubs Isn't Music to Some Ears

Tamir Kalifa, Texas Tribune

Although the crowd of clubs and concert halls on Austin’s famous Sixth Street is just a few blocks from the state Capitol, the worlds of live music and policymaking seldom meet.

But this session, lawmakers are considering subsidizing live music.

House Bill 3095, by state Rep. Mark Strama, D-Austin, would cut in half the tax on mixed beverages for businesses that stage live music at least four nights a week for 45 weeks per year, provided they prove that they will spend the savings putting on concerts.

Strama proposed the bill with his hometown in mind. “Music is as much a part of the Austin economy as oil and gas are part of the Texas economy,” he said. "It's part of what makes this city so appealing."

Some club owners and performers say the bill would help at a time when the music industry is suffering. But organizations representing cities and counties around Texas disagree, saying that the decreased tax would rob them of needed revenue, and that there is no proof that the savings would be passed on to musicians.

Nearly 200 Texas venues — roughly a third of which are in Austin  — would probably meet the tax cut requirements, according to the Texas Music Office, an agency financed by the governor’s office. They would have to apply for the status of "live music presenter" each year with the state comptroller's office.

The Legislative Budget Board, which studies the economic impact of potential legislation,estimated that the bill could cost the state, cities and counties $60 million to $80 million per year.

Strama said that projection was too high for the estimated number of eligible venues, and he is working to get a lower figure before bringing the bill back to a House committee, where it is  pending.

In a letter to music professionals urging support for the bill, Terry Lickona, lead producer of the nationally syndicated live music show Austin City Limits, wrote that with the downturn in profits for recorded music, “the industry’s primary business driver” is now live music. But venue owners, he said, face “high start-up costs, high taxes and copyright fees,” so they need more incentives to book live acts.

“It’s hard to have a live music venue make money,” said Travis Newman, who books music for The Parish, a downtown Austin bar that regularly presents live music. “Musicians end up being squeezed.”

But the tax break would be “such a cost to the cities,” said Shanna Igo, deputy executive director of the Texas Municipal League, an advocate for cities.

Donald Lee, director of the Texas Conference of Urban Counties, said the tax breaks would be pocketed by the clubs and would not go to musicians. “We just can’t reconcile ourselves to the idea that live music venues in Texas are threatened by the current tax on alcohol, which there seems to be an insatiable appetite for, no matter what the price,” he said. "They should let local communities do this, rather than a statewide thing."

The city of Austin has not taken an official position on the bill, but a spokesman said it usually relies on the municipal league to vet bills that affect them.

Newman, whose club The Parish would probably be approved for the tax break, acknowledged that some venues would probably pocket the extra money. “But the cream rises to the top,” he said, “and bands will know which venues treat musicians well and pass on the savings.”

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