Lights! Camera! Action on rebates NM can afford!

“There’s no business like show business, like no business I know. Everything about it is appealing.”

Gov. Michelle Lujan Grisham is channeling the lines Ethel Merman belted out in the 1954 classic film “There’s No Business Like Show Business” — saying it’s time for New Mexico to “take off the shackles” from the film industry and “let it rip.”

That’s because the film industry brings much-needed jobs and money to the Land of Enchantment. To attract those jobs, taxpayers rebate the movie and television projects 25 cents on the dollar (30 cents for long-running TV shows).

The shackles referred to by Lujan Grisham? The $50 million annual cap put on rebates in 2011. The cap helped balance the budget, but it also created a $250 million backlog in rebates while discouraging some projects from coming here.

Remove those shackles and many believe the number of films will increase dramatically — bringing in those extra jobs. But the bill facing N.M. taxpayers will also increase.

While New Mexico certainly wants the film business to thrive, our budget needs to be crafted in reality, not Hollywood, and there is a limit to how much the state can subsidize this or any program. A legislative economist says if the state lifts the cap on rebates, it would be spending $200,000 per film industry job.

Louisiana learned the hard way what not having a cap can do to a budget. A 2017 study found that in 2016, that state’s film incentives generated $63.2 million in taxes and cost taxpayers $282.6 million. In fact, almost every independent study shows film rebates to be a loser for taxpayers.

And so in 2017 Louisiana added caps to make its program more predictable for the state budget. Now the state can issue $150 million in credits a year and pay out $180 million.

When you’re handing out that kind of cash there has to be a return on investment. New Mexico taxpayers deserve to know what they are getting for their giveaway.

They know they will not recoup the money in straight taxes, but does the job creation make it worth our while?

To know that would require the films to be more transparent about how and where they are spending their money.

It is essential, as state lawmakers consider lifting the cap, for the industry as well as individual projects to provide more information on their effect on our local economies — from the number and wages of full-, part-time and seasonal employees to the amount spent in various ancillary sectors, from building materials to room nights to catering. That tells which projects really deliver economic impact and are worth the rebate.

Yes, New Mexico has built up a solid infrastructure for the industry — from actors to extras to directors to caterers to set designers. And there may even be more opportunities now that CNM and the city of Albuquerque are building the CNM Film Production Center of Excellence in the Rail Yards to help train residents to work in the film industry and Netflix is planning to call the state home for many of its upcoming productions.

And yes, keeping the $50 million cap and failing to pay off the current rebate backlog could leave New Mexico on many film firms’ cutting-room floors. The overall industry direct-spend figure is already in decline, from $507 million in fiscal 2017 to $234 million in fiscal 2018.

So it’s understandable Lujan Grisham wants to lift the cap and pay off the $250 million backlog. She believes that could lead to the doubling of productions in the state. But considering Louisiana’s experience, can New Mexico afford that?

So far lawmakers don’t seem to think so. The payoff is not in the Legislative Finance Committee budget plan, and House Minority Leader James Townsend, R-Artesia, speaks for many when he says the film subsidies’ impact should be closely scrutinized before lawmakers vote to do away with the spending cap. To some, it’s a form of welfare for Hollywood executives better spent elsewhere.

Industry advocates should craft a film incentive program that encourages projects to come here AND is sustainable. A key component is ensuring we finally know what bang we’re getting for our bucks. Eric Witt, executive director of the Santa Fe Film Office, says the 2019 Legislature will open with “eight years of pent-up momentum that is just going to blow up on the opening day. … The floodgates are going to open.”

And as with a Hollywood disaster film, that’s what anyone with an eye on the state budget needs to be concerned about.