If what I think is happening is happening, it better not be
“Transparency. That’s what I want.” State Rep. Dennis J. Kintigh, R-Roswell, was speaking about money matters regarding the state’s film-incentive program. He has tried two years in a row to push forward a bill eliminating the incentives. His bill has been tabled both times, most recently in the Labor and Human Resources Committee in January.
Kintigh says he has a lot of questions about how and where the film-incentive monies flow. He’s not the only state legislator to voice such concerns. Representative John Arthur Smith, D-Deming, recently said that he is receiving more and more calls from people in the film industry about abuses taking place in the name of incentives. Smith’s SB 235, which he introduced in late January, would cap incentives at $2 million per project. (As of press time, the bill had not been heard.)
The New Mexico Film Office’s official line is that since the governor signed these lucrative incentive bills— zero-percent interest loans on qualifying productions, a 25 percent tax rebate deal, and other such attractions— into law in 2003, the economic impact on the state has been approximately $3 billion. “In fiscal year 2009, the state paid $77 million in refundable tax credits [rebates], which [at 25 percent] means production companies would have turned in receipts for $308 million in direct spending on New Mexico cast and crew, goods and services,” said Pahl Shipley, head of publicity and media relations for the film office.
Yet as analysts study the viability of film-incentive programs around the country, more criticisms pop up. New England Public Policy Center analyst Jennifer Weiner took a critical look at New Mexico’s highly touted Ernst & Young Study, which showed the state makes $1.50 for every buck spent; Weiner’s study suggested it grossly overestimated the financial benefits of New Mexico’s program. William Luther of the Tax Foundation has written an in-depth look at the problems with film-incentive programs around the country. His report is available at the organization’sWeb site (taxfoundation.org).
Kintigh, Smith, and other legislators would likely be less intent on killing the incentives if the accounting practices inside the film industry were available to review. It’s an open secret that the attorney general began investigating New Mexico’s film-training program ( not the same thing as the film-incentives program) a couple of years ago. The New Mexico Film Office acknowledged as much to The New Mexican more than a year ago, but the office’s director, Lisa Strout, recently stated she knows nothing about the particulars of the effort. The New Mexico attorney general’s office gave a “will not confirm or deny” response when queried.
Via a public records request, I reviewed film-training documents provided by the New Mexico Economic Development Department, of which the state film office is part. If I had to come up with a catchy headline for the documents, it would read, “Union head’s gal pal lands $250,000 contract to train filmmakers.”
The contract— signed by and involving the Economic Development Department, the state’s tax and revenue office, IATSE 480 (the local film technicians’ union), and This Machine Productions— involved coordinating instructors to teach various film crafts, including makeup, set dressing, sound, script supervising, and construction. Instructors from This Machine Productions taught three semesters at participating Film Technicians’ Training Program schools around the state, including Santa Fe Community College. The program, budgeted at $250,000, matched up seasoned mentors with trainees who worked mostly on independent productions and short and student films.
Jon Hendry is business agent for IATSE 480. His girlfriend is Lisa Van Allen, who owns and runs This Machine Productions. Her résumé reveals a busy career in craft services for movies, though nothing in her background suggests she’s qualified to coordinate the film-training project. According to Van Allen, Strout, and Hendry, Van Allen worked as a volunteer, taking no money for this project.
The film-training invoices I viewed add up OK but are rife with “facilitation” fees— usually $1,000 or $2,000— totaling about $53,000. Speaking by phone, Van Allen said these fees were paid primarily to production managers on various training projects (she wouldn’t say who they were but said they didn’t include Hendry or any of her friends); she added that some of these fees were tied to housing or equipment reimbursement. Van Allen said the attorney general’s office told her it was investigating the program because it had received a complaint; she said she knows nothing more.
This is a potential conflict of interest. Whether Van Allen— who has a contract through her company, Duke City Gourmet, with the city of Santa Fe to work as a film liaison— took a fee for the job doesn’t matter; her company processed all this work and money in just over a year. Did this job give her an “in” when it came to landing catering work on sets? She told me she’s aware of the perception that, as Hendry’s girlfriend, she is seen as having an advantage over other craft-service company leads.
Sticking to the union
Van Allen comes off as a straight shooter, but Hendry has stumbled before. In 2006, he resigned as marketing director for the state’s Tourism Department after questions arose about conflicts of interest:
Let’s keep it clean
he was also working for IATSE 480 at the time. That action followed a publicized event in which filmmaker Christopher Coppola (Francis Ford Coppola’s nephew) said Hendry threatened to withhold union labor from Coppola’s company if Coppola didn’t support HB 358. Hendry supported that bill, which would have given an additional 5 percent tax break— over and above the breaks enjoyed by other companies — to Lion’s Gate Entertainment, which hoped to gain a foothold in New Mexico. And last year some state legislators accused Hendry of “doctoring” an official legislative financial-impact report in an effort to derail Kintigh’s bill. Several independent filmmakers have also said (mostly on condition of anonymity, though one, Albuquerque filmmaker Justin Evans, has written a blog about it), that Hendry has threatened to shut down their productions if they didn’t hire union workers. None of this is behavior becoming of a professional; it makes the entire industry here look bad.
Besides Hendry’s union involvement, he sits on the Governor’s Council on Film and Media Industries and is one of the chief lobbyists for film in New Mexico. Visit the film office’sWeb site, and you’ll find he is a contact person for filmmakers seeking eligibility for investment loans for film productions. He also helps run Big House Institute— a venue for filmmakers to borrow or rent movie-related furniture, props, and costumes— out at the old state penitentiary. And Hendry helped start (and still defends) the impotent New Mexico Film Museum, which has no exhibits and no programming budget but does have a nice salary for its director, Sharon Maloof, who was appointed to the exempt position by Gov. Bill Richardson. The film-training program— which Hendry and other pro-film advocates tout as a successful tool for creating and maintaining jobs in New Mexico— is just a small part of the overall financial picture here. But if questions arise about that, then doubts could be raised about other elements of our incentives program. No wonder some state lawmakers are questioning the worth of the overall program.
What does this all add up to? I don’t agree with killing the incentives. I like the common-sense comments made by Labor and Human Resources Committee chairman Miguel P. Garcia, D-Albuquerque, who told Kintigh during the January hearing that even when using the slightest of multipliers, the film business must be having a positive financial impact on the state. Business people in the region — car-rental agencies, hotel owners, restaurateurs— claim business is booming when a movie company uses their services.
But if lawmakers hear that the film industry is a dirty business, they’re going to want to kill or cap incentives. Both The New Mexican and The Albuquerque Journal recently printed editorials urging state lawmakers not to limit incentives. Both editorials also rightly asked for a clear accounting of how much the film-incentives program costs, how much return we’re getting, and who benefits. Other states are having accountability problems too— last year, Iowa’s governor Chet Culver ordered a temporary halt to his state’s film-incentive program after accusations of financial misappropriation in its film office, and Louisiana had a scandal several years ago involving bribes and improperly handled film tax credits.
New Mexico’s lawmakers could refocus their energy on working with the state auditor and the Taxation and Revenue Department to ensure quality control on all financial dealings within the film business. They could also support the attorney general’s office in its efforts to wade through the confusion. Perhaps the legislative branch can take a more active role in reviewing and recommending film projects for the state. And if somebody— or a few somebodies— are illegally benefiting from the incentives, the state should punish them and not the incentive program itself.
IATSE 480 member Scott Evans during Film and Media Day (Feb. 5), designed to spotlight the importance of the film industry in the state