By: Huffman, Alvarado, Hagenbuch  S.B. No. 22          (In the Senate - Filed March 11, 2025; March 12, 2025, read   first time and referred to Committee on Finance; April 2, 2025,   reported adversely, with favorable Committee Substitute by the   following vote:  Yeas 11, Nays 0; April 2, 2025, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 22 By:  Huffman     A BILL TO BE ENTITLED   AN ACT     relating to the Texas moving image industry incentive program and   the establishment and funding of the Texas moving image industry   incentive fund.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1.  LEGISLATIVE INTENT          SECTION 1.01.  It is the intent of the legislature that the   Music, Film, Television, and Multimedia Office is not required to   act on any grant application and may deny an application because of   inappropriate content or content that portrays Texas or Texans in a   negative fashion, as determined by the office, in a moving image   project and that the office shall consider general standards of   decency and respect for the diverse beliefs and values of the   citizens of Texas when determining whether to act on or deny a grant   application.   ARTICLE 2.  TEXAS MOVING IMAGE INDUSTRY INCENTIVE PROGRAM; FUND          SECTION 2.01.  Section 485.021, Government Code, is amended   by adding Subdivision (1-a) to read as follows:                (1-a)  "Incentive fund" means the Texas moving image   industry incentive fund established under Section 485.0225.          SECTION 2.02.  Section 485.022, Government Code, is amended   by amending Subsections (a) and (f) and adding Subsections (g),   (h), (i), and (j) to read as follows:          (a)  The office shall administer a grant program for   production companies that produce moving image projects in this   state:                (1)  using money from the incentive fund; or                (2)  [,] to the extent that gifts, grants, donations,   or other money, including appropriations, are made available to the   office for that purpose.          (f)  The following types of projects are not eligible for   grants under this subchapter:                (1)  pornography or obscene material, as defined by   Section 43.21, Penal Code;                (2)  news, current event or public access programming,   political advertising, including public service announcements that   advance a public policy or political position, or programs that   include weather or market reports;                (3)  local events or religious services;                (4)  productions not intended for commercial,   educational, or instructional distribution;                (5)  sporting events or activities;                (6)  awards shows, galas, or telethons and similar   programs that solicit funds;                (7)  projects intended for undergraduate or graduate   course credit;                (8)  application software, system software, or   middleware;                (9)  casino-type video games and interactive digital   media experiences used in a gambling device, as defined by Section   47.01, Penal Code; or                (10)  commercials or advertising for this state or any   agency or department of this state.          (g)  Subsection (f) is not an exclusive list of the types of   projects that are ineligible for a grant under this subchapter. The   office has broad authority to:                (1)  designate other types of projects as ineligible   for a grant;                (2)  elect not to take action on a grant application;                (3)  deny a grant application; or                (4)  award a grant.          (h)  As part of the preliminary application process [Before a   grant is awarded under this subchapter], the office shall review   the proposed content of a moving image project in the manner   provided by office rule and advise the prospective applicant   whether the content will preclude the project from receiving a   grant under this subchapter.          (i)  Once an approved project has been completed, the office   shall review the final content before issuing the grant payment   to[:                [(1)  require a copy of the final script; and                [(2)]  determine if any substantial changes occurred   during production on a moving image project to include content   described by Subsection (e) or (f).          (j)  The office has broad discretion to rescind preliminary   approval at any point in the grant process.          SECTION 2.03.  Subchapter B, Chapter 485, Government Code,   is amended by adding Section 485.0225 to read as follows:          Sec. 485.0225.  TEXAS MOVING IMAGE INDUSTRY INCENTIVE FUND.   (a)  In this section, "trust company" means the Texas Treasury   Safekeeping Trust Company.          (b)  The Texas moving image industry incentive fund is   established as a fund outside the state treasury to be held and   invested by the trust company and administered by the office.          (c)  Money in the incentive fund may be spent without   legislative appropriation and may be used only for the purposes of   awarding grants under this subchapter and paying the trust   company's expenses of managing the incentive fund's assets.          (d)  The incentive fund consists of:                (1)  money appropriated, transferred, or deposited to   the credit of the incentive fund by the legislature;                (2)  money, including the proceeds of a fee or tax   imposed by this state, that by statute is dedicated for deposit to   the credit of the incentive fund;                (3)  investment earnings and interest earned on amounts   credited to the incentive fund; and                (4)  gifts, grants, and donations made to the office   and deposited to the credit of the incentive fund.          (e)  The trust company shall hold and invest the incentive   fund.  The incentive fund may be invested with the state treasury   pool and may be pooled with other state assets for purposes of   investment.          (f)  The overall objective for the investment of the   incentive fund is to maintain sufficient liquidity to meet the   needs of the incentive fund while striving to preserve the   purchasing power of the incentive fund over a full economic cycle.          (g)  The trust company may acquire, exchange, sell,   supervise, manage, or retain any kind of investment that a prudent   investor, exercising reasonable care, skill, and caution, would   acquire or retain in light of the purposes, terms, distribution   requirements, and other circumstances of the incentive fund then   prevailing, taking into consideration the investment of all the   assets of the incentive fund rather than a single investment.          (h)  The expenses of managing the incentive fund's assets   shall be paid from the incentive fund.          (i)  The office annually shall provide to the trust company a   forecast of the cash flows into and out of the incentive fund. The   office shall provide updates to the forecast as appropriate to   ensure the trust company is able to achieve the objective specified   by Subsection (f).          (j)  The trust company shall disburse money from the   incentive fund as directed by the office.          SECTION 2.04.  Section 485.023, Government Code, is amended   to read as follows:          Sec. 485.023.  QUALIFICATION.  To qualify for a grant under   this subchapter:                (1)  a production company must have spent a minimum of:                      (A)   $250,000 in in-state spending for a film or   television program; or                      (B)  $100,000 in in-state spending for a   commercial or series of commercials, an educational or   instructional video or series of educational or instructional   videos, or a digital interactive media production;                (2)  [at least 55 percent of the production crew,   actors, and extras for a moving image project must be Texas   residents] unless the office determines and certifies in writing   that a sufficient number of qualified crew, actors, and extras are   not available to the company at the time principal photography   begins, the percentage of the production crew, actors, and extras   for a moving image project who are Texas residents must be at least:                      (A)  35 percent for a moving image project that   begins principal photography on or after September 1, 2025, and   before September 1, 2027;                      (B)  40 percent for a moving image project that   begins principal photography on or after September 1, 2027, and   before September 1, 2029;                      (C)  45 percent for a moving image project that   begins principal photography on or after September 1, 2029, and   before September 1, 2031; and                      (D)  50 percent for a moving image project that   begins principal photography on or after September 1, 2031;                (3)  at least 60 percent of the moving image project   must be filmed in Texas; and                (4)  a production company must submit to the office an   expended budget, in a format prescribed by the office, that   reflects all in-state spending and includes all receipts, invoices,   pay orders, and other documentation considered necessary by the   office to accurately determine the amount of a production company's   in-state spending that has occurred.          SECTION 2.05.  Sections 485.024(a) and (c), Government Code,   are amended to read as follows:          (a)  Except as provided by Section 485.025, for a moving   image project that is:                (1)  a feature film, a television program other than a   reality television program, or a visual effects project for a   feature film or television program other than a reality television   program with total in-state spending of:                      (A)  at least $250,000 but less than $1 million,   the amount of a grant under this subchapter is equal to five percent   of total in-state spending for the project;                      (B)  at least $1 million but less than $1.5   million, the amount of a grant under this subchapter is equal to 10   percent of total in-state spending for the project; or                      (C)  at least $1.5 million, the amount of a grant   under this subchapter is equal to 25 percent of total in-state   spending for the project;                (2)  a digital interactive media production with total   in-state spending of:                      (A)  at least $100,000 but less than $1 million,   the amount of a grant under this subchapter is equal to five percent   of total in-state spending for the project;                      (B)  at least $1 million but less than $1.5   million, the amount of a grant under this subchapter is equal to 10   percent of total in-state spending for the project; or                      (C)  at least $1.5 million, the amount of a grant   under this subchapter is equal to 25 percent of total in-state   spending for the project;                (3)  a reality television program as defined by office   rule with total in-state spending of:                      (A)  at least $250,000 but less than $1 million,   the amount of a grant under this subchapter is equal to five percent   of total in-state spending for the project; or                      (B)  at least $1 million, the amount of a grant   under this subchapter is equal to 10 percent of total in-state   spending for the project; or                (4)  a commercial, a series of commercials, an   educational or instructional video, a series of educational or   instructional videos, or a visual effects project for a commercial,   series of commercials, educational or instructional video, or   series of educational or instructional videos with total in-state   spending of:                      (A)  at least $100,000 but less than $1 million,   the amount of a grant under this subchapter is equal to five percent   of total in-state spending for the project; or                      (B)  at least $1 million, the amount of a grant   under this subchapter is equal to 10 percent of total in-state   spending for the project [may not exceed the amount established by   office rule. The office shall adopt rules prescribing the method   the office will use to calculate the amount of a grant under this   subsection. The office shall publish a written summary of the   method for determining grants before awarding a grant under this   section. The method must consider at a minimum:                [(1)  the current and likely future effect a moving   image project will have on employment, tourism, and economic   activity in this state; and                [(2)  the amount of a production company's in-state   spending for a moving image project].          (c)  The office may [only] make a grant from the incentive   fund or appropriated funds.          SECTION 2.06.  Section 485.025, Government Code, is amended   to read as follows:          Sec. 485.025.  ADDITIONAL GRANTS [GRANT] FOR CERTAIN   PROJECTS [UNDERUTILIZED AND ECONOMICALLY DISTRESSED AREAS].  (a)    In addition to the grant calculated under Section 485.024, a   production company is eligible for:                (1)  a Texas heritage grant in an amount equal to 2.5   percent of total in-state spending for a moving image project that   qualifies under Subsection (b);                (2)  a rural filming grant in an amount equal to 2.5   percent of total in-state spending for a moving image project that   qualifies under Subsection (c);                (3)  a postproduction grant in an amount equal to one   percent of total in-state spending for a moving image project that   qualifies under Subsection (d); or                (4)  a Texas veterans grant in an amount equal to 2.5   percent of total in-state spending for a moving image project that   qualifies under Subsection (e).          (b)  A moving image project qualifies for a Texas heritage   grant under Subsection (a)(1) if the project is designated by the   office as a Texas heritage project according to rules adopted by the   office.  The office is not required to designate any moving image   project as a Texas heritage project and has sole discretion to make   that designation.  In determining whether to designate a moving   image project as a Texas heritage project, the office shall   consider:                (1)  the project's current and likely future effect on   the promotion of family values; or                (2)  whether the project portrays Texas and Texans in a   positive fashion.          (c)  A moving image project qualifies for a rural filming   grant under Subsection (a)(2) if the production company spends at   least 35 percent of the project's filming days or man hours, as   applicable and as defined by office rule, in a county in this state   with a population of 300,000 or less.          (d)  A moving image project qualifies for a postproduction   grant under Subsection (a)(3) if at least 25 percent of the total   in-state spending for the project is spent by the production   company during postproduction on eligible expenditures as provided   by office rule, including expenditures for labor, vendor, and music   costs.          (e)  A moving image project qualifies for a Texas veterans   grant under Subsection (a)(4) if at least five percent of the   production crew, actors, and extras for the project are Texas   residents who served in and were honorably discharged from:                (1)  the army, navy, air force, coast guard, or marine   corps of the United States;                (2)  the Texas National Guard as defined by Section   431.001; or                (3)  a reserve component of an entity listed in   Subdivision (1) or (2).          (f)  A moving image project may qualify for and receive more   than one additional grant under Subsection (a).  However, the total   amount of all grants received by a moving image project may not   exceed 31 percent of the total in-state spending for the project   [that spends at least 25 percent of a moving image project's filming   days in an underutilized and economically distressed area is   eligible for an additional grant in an amount equal to 2.5 percent   of the total amount of the production company's in-state spending   for the moving image project].          SECTION 2.07.  Section 151.801, Tax Code, is amended by   amending Subsection (a) and adding Subsection (g) to read as   follows:          (a)  Except for [the] amounts otherwise allocated under this   section [Subsections (b), (c), (c-2), (c-3), and (f)], all proceeds   from the collection of the taxes imposed by this chapter shall be   deposited to the credit of the general revenue fund.          (g)  Not later than the 30th day of each state fiscal   biennium, the comptroller shall deposit to the credit of the Texas   moving image industry incentive fund established under Section   485.0225, Government Code, $500 million of the proceeds from the   collection of the taxes imposed by this chapter.          SECTION 2.08.  (a)  The Music, Film, Television, and   Multimedia Office shall adopt rules necessary to implement and   administer Subchapter B, Chapter 485, Government Code, as amended   by this article.          (b)  The comptroller of public accounts may adopt rules   necessary to implement and administer Section 485.0225, Government   Code, as added by this article.   ARTICLE 3.  SUNSET PROVISIONS          SECTION 3.01.  Effective September 1, 2035, Sections   485.022(a) and (f), Government Code, are amended to read as   follows:          (a)  The office shall administer a grant program for   production companies that produce moving image projects in this   state, to the extent that gifts, grants, donations, or other money,   including appropriations, are made available to the office for that   purpose.          (f)  Before a grant is awarded under this subchapter, the   office shall:                (1)  require a copy of the final script; and                (2)  determine if any substantial changes occurred   during production on a moving image project to include content   described by Subsection (e).          SECTION 3.02.  Effective September 1, 2035, Section 485.023,   Government Code, is amended to read as follows:          Sec. 485.023.  QUALIFICATION.  To qualify for a grant under   this subchapter:                (1)  a production company must have spent a minimum of:                      (A)  $250,000 in in-state spending for a film or   television program; or                      (B)  $100,000 in in-state spending for a   commercial or series of commercials, an educational or   instructional video or series of educational or instructional   videos, or a digital interactive media production;                (2)  at least 55 percent of the production crew,   actors, and extras for a moving image project must be Texas   residents unless the office determines and certifies in writing   that a sufficient number of qualified crew, actors, and extras are   not available to the company at the time principal photography   begins;                (3)  at least 60 percent of the moving image project   must be filmed in Texas; and                (4)  a production company must submit to the office an   expended budget, in a format prescribed by the office, that   reflects all in-state spending and includes all receipts, invoices,   pay orders, and other documentation considered necessary by the   office to accurately determine the amount of a production company's   in-state spending that has occurred.          SECTION 3.03.  Effective September 1, 2035, Sections   485.024(a) and (c), Government Code, are amended to read as   follows:          (a)  Except as provided by Section 485.025, a grant under   this subchapter may not exceed the amount established by office   rule.  The office shall adopt rules prescribing the method the   office will use to calculate the amount of a grant under this   subsection.  The office shall publish a written summary of the   method for determining grants before awarding a grant under this   section.  The method must consider at a minimum:                (1)  the current and likely future effect a moving   image project will have on employment, tourism, and economic   activity in this state; and                (2)  the amount of a production company's in-state   spending for a moving image project.          (c)  The office may only make a grant from appropriated   funds.          SECTION 3.04.  Effective September 1, 2035, Section 485.025,   Government Code, is amended to read as follows:          Sec. 485.025.  ADDITIONAL GRANT FOR UNDERUTILIZED AND   ECONOMICALLY DISTRESSED AREAS.  In addition to the grant calculated   under Section 485.024, a production company that spends at least 25   percent of a moving image project's filming days in an   underutilized and economically distressed area is eligible for an   additional grant in an amount equal to 2.5 percent of the total   amount of the production company's in-state spending for the moving   image project.          SECTION 3.05.  The following provisions added by Article 2   of this Act expire on August 31, 2035:                (1)  Section 485.021(1-a), Government Code;                (2)  Sections 485.022(g), (h), (i), and (j), Government   Code;                (3)  Section 485.0225, Government Code; and                (4)  Section 151.801(g), Tax Code.          SECTION 3.06.  (a)  On August 31, 2035, the Texas moving   image industry incentive fund established under Section 485.0225,   Government Code, as added by Article 2 of this Act, is abolished and   the unencumbered and unspent balance of the fund on that date is   transferred to the general revenue fund.          (b)  Notwithstanding the changes in law made by this article,   a grant awarded under Subchapter B, Chapter 485, Government Code,   on or after September 1, 2025, and before September 1, 2035, is   governed by that subchapter as amended by Article 2 of this Act and   any subsequent amendments to that law by the legislature in effect   on the date the grant is awarded, and that law is continued in   effect for that purpose.          (c)  A grant awarded under Subchapter B, Chapter 485,   Government Code, on or after September 1, 2035, is governed by that   subchapter as amended by this article.   ARTICLE 4.  EFFECTIVE DATE          SECTION 4.01.  Except as otherwise provided by this Act,   this Act takes effect September 1, 2025.     * * * * *