1. (a) The following are eligible expenditures:

   1. (1) Wages and per diems paid to Texas residents for work performed in Texas, including additional compensation paid as part of a contractual or collective bargaining agreement.

      1. (A) For the purpose of calculating the grant amount only the first $1,000,000 in wages for each job position will be included.

      2. (B) Eligible wages include, but are not limited to:

         1. (i) payments for gross wages;
         2. (ii) per diem payments;
         3. (iii) employer paid Social Security (OASDI) payments;
         4. (iv) employer paid Medicare (MEDI) payments;
         5. (v) employer paid Federal Unemployment Insurance (FUI) payments;
         6. (vi) employer paid Texas State Unemployment Insurance (SUI) payments;
         7. (vii) employer paid pension, health and welfare payments; and
         8. (viii) employer paid vacation and holiday payments.

   2. (2) Additional compensation or reimbursements paid to Texas residents including, but not limited to:

      1. (A) mileage or car allowance;
      2. (B) housing allowance; and
      3. (C) box or kit rentals for use of personal equipment.
   3. (3) Workers compensation insurance for Texas residents, but only if the premiums are paid to a Texas-based insurance company or broker.
   4. (4) Payroll company service fees for Texas residents, but only if paid to a Texas-based payroll company that processes payroll within Texas.
   5. (5) Payments made to Texas companies for goods and services domiciled and used in Texas that are directly attributable to the physical production of the moving image project. In the case of video games and animated projects, the amount attributed to pre-production and research and development costs will be limited to an amount not to exceed 30% of the project's overall in-state spending.
   6. (6) Payments for shipping on shipments originating in Texas.
   7. (7) Air travel to and from Texas on a Texas-based airline, including American Airlines, Continental Airlines and Southwest Airlines, or on a Texas-based air charter service.
   8. (8) Rentals, leases and purchases of vehicles registered and licensed in the State of Texas or rented, leased or purchased from a Texas domiciled company or individual.
   9. (9) Music that is specifically created for the project and fees paid to Texas residents hired to compose, orchestrate and perform the music.
   10. (10) Legal fees paid to Texas-based lawyers or law firms that are directly attributable to the physical production of the moving image project.
   11. (11) Internet purchases, but only if purchased from a Texas-based company or a retailer with a physical store or outlet in Texas. Items purchased must be shipped directly to Texas.

2. (b) The following are ineligible expenditures:

   1. (1) Payments made to non-Texas companies.
   2. (2) Payments made for goods and services not domiciled or used in Texas.
   3. (3) Payments made for goods and services that are not directly attributable to the physical production of the moving image project.
   4. (4) Payments made by video game and animated projects for pre-production costs that exceed 30% of the project's overall in-state spending.
   5. (5) Expenses related to distribution, publicity, marketing, or promotion of the project.
   6. (6) Payments for facilities that are part of a permanent/continuous business operation including, but not limited to, rental, lease or mortgage payments, utilities and insurance.

   7. (7) Wages and per diems paid to non-Texas residents, including additional compensation paid as part of a contractual or collective bargaining agreement. Wages include, but are not limited to:

      1. (A) payments for gross wages;
      2. (B) per diem payments;
      3. (C) employer paid Social Security (OASDI) payments;
      4. (D) employer paid Medicare (MEDI) payments;
      5. (E) employer paid Federal Unemployment Insurance (FUI) payments;
      6. (F) employer paid Texas State Unemployment Insurance (SUI) payments;
      7. (G) employer paid pension, health and welfare payments; and
      8. (H) employer paid vacation and holiday payments.
   8. (8) Payments made to pass-through companies.
   9. (9) Fees for story rights, music rights or clearance rights.

   10. (10) Additional compensation or reimbursements paid to non-Texas residents including, but not limited to:

       1. (A) mileage or car allowance;
       2. (B) housing allowance; and
       3. (C) box or kit rentals for use of personal equipment.
   11. (11) Workers compensation insurance payments for non-Texas residents.
   12. (12) Payroll company service fees for non-Texas residents.
   13. (13) Payments for shipments originating outside of Texas.
   14. (14) Payments for mobile and landline telephone service if the service or billing address is not in Texas.
   15. (15) Payments for alcoholic beverages, cigarettes and tobacco products.
   16. (16) Payments to adult oriented businesses.
   17. (17) Payments for entertainment including, but not limited to, parties, event tickets, movies, hotel mini-bar items, meals unrelated to the physical production of the project and personal gifts.
   18. (18) Payments for tips and gratuities.
3. (c) The Texas Film Commission reserves the right to determine which expenses are eligible or ineligible. These lists are not all inclusive.

Source Note:The provisions of this §121.5 adopted to be effective March 10, 2008, 33 TexReg 2019; amended to be effective November 22, 2009, 34 TexReg 8029.