Austin music venues could receive $100K liquor tax rebates from new state incubator

Live music venues in Austin could receive up to $100,000 annually in state liquor tax rebates from a new program created to provide relief for the state’s live music industry.

The Texas Music Incubator Rebate Program was passed by the state Legislature last week and signed into law this week, providing just over $10 million per year for the next two years that can be refunded to hospitality businesses that make live music a substantial component of their revenue and operations.

Live music proponents first conceived the idea of a liquor tax rebate in 2013, based on the reality that the economics of live music venues are more challenging than traditional bars and nightclubs that pay the same liquor tax rate. First introduced in the 2019 session, the legislation failed to receive a Senate vote that year and then was passed in 2021 without funding.

The state’s substantial budget surplus this year made the funding argument an easier one for proponents, such as Rebecca Reynolds, president and founder of the Austin chapter of the Music Venue Alliance.

“The whole point of doing this was because of the fact that venues have always been treated the same as bars, and their economics are extremely different … because they spend almost all of the money they bring in to then turn around and provide this cultural benefit,” she said. “It was really important to preserve and sustain that cultural benefit to the community, to not tax them the same as businesses who aren’t doing that.”

The program’s guidelines require businesses to meet a number of criteria to qualify for a possible rebate, with the Texas Music Office handling the administration of how owners and operators can apply for their portion of the annual funding.

Reynolds said that based on the state’s criteria, which roughly matches the city’s requirements to define a live music venue in its building code, there are just over four dozen businesses in Austin that could qualify for the rebates. Those criteria include marketing of live music performances through listings in printed or electronic publications, providing live music performances at least five nights per week, employing an assortment of designated staff for live music-related roles, having a performance and audience space, providing lighting and sound for performances, providing space for audio equipment or instrument storage, requiring a cover charge or ticket for performances, and maintaining hours of operation that coincide with live music performance times.

“For some places this will determine whether or not they can continue to operate. They’ve been patiently waiting but paying very close attention because this is kind of a do-or-die program for them,” Reynolds said.

“For others this is going to allow them to have more shows, allow them to pay higher rates to artists. The whole point is to adjust and account for the fact that (owners) are choosing to not just be an alcohol business, but to be these places where people can play and go see live music.”

Stephen Sternschein, a partner in the Resound Presents promotion company and co-owner of the Empire and Parish music venues, said most clubs in Austin that have a capacity of between 400 and 1,000 patrons should qualify for the $100,000 maximum annual rebate. He said that amount would be equivalent to adding another 20 to 30 concerts’ worth of revenue for his clubs and will help cushion against traditionally slower summer months.

“We don’t stop throwing shows in the summer but it’s never very profitable, and a lot of times it’s not profitable at all,” he said. “The hardest thing for us is to be able to pay local artists a wage that’s fair, but also not lose money because they don’t sell enough tickets. So that’s where this is going to have the most impact. It’s not like we’re going to see more tours coming through. We’re going to be able to pay and support our local artists more than we have in the past.”

Photo made available through a Creative Commons license.

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