GOP says tax credit for film industry failing

Program is described as too expensive and does not reach targeted rural areas

Despite changes this year to the state’s film industry tax credit meant to spur more filming in rural New Mexico, Republicans on a state tax panel are still unhappy with the program.

Sen. James White and GOP Reps. Jason Harper and Rod Montoya criticized the program during a joint tax panel hearing Wednesday, calling it too expensive, arguing that it has failed to help rural New Mexico and that the nearly $150 million in tax credits to be paid out in 2019-20 would be better spent on programs or industries that will stay in the state.

Film industry tax credits have long drawn the ire of Republicans in New Mexico. While there’s no specific proposal this year to do away with them, several members of the Revenue Stabilization and Tax Policy Committee have revived the debate on whether incentives for companies such as Netflix and NBCUniversal should continue.

New Mexico is estimated to spend $80.6 million in film industry tax credits in fiscal year 2020, $110.7 million in fiscal year 2021, $145 million in fiscal year 2022 and $165 million in fiscal year 2023.

“Three percent of our economy is essentially subsidiz

ing this industry,” Harper said, adding that he “learned very quickly that the film industry is not invested in New Mexico.”

The Sandoval County lawmaker called it “corporate welfare” and said the money would be better spent on industries that have a “vested” interest in the state. Harper is a longtime Republican expert on taxes in the Legislature.

In 2019, state lawmakers approved changes signed by Gov. Michelle Lujan Grisham, a Democrat, that increased an annual cap of $50 million on film industry credits to $110 million and $100 million for backlog liabilities, according to a document from the Taxation and Revenue Department and Economic Development Department.

The plan also offered an extra 5 percent credit for filming in rural locations. Movies or TV shows have been shot in Alamogordo, Carrizozo, Cedar Crest, Chama, Española, Farmington, the Navajo Nation and many other rural locations in 2019. But the change has not appeased Republicans.

Rep. Montoya, the minority whip from Farmington, said he’s “tempted” to introduce a bill in January offering what he called a similar “rebate” for the High Wage Jobs Tax Credit, instead. The existing credit is meant to spur economic development that creates high-wage jobs.

“If it works for one industry, it should work for others,” Montoya said. “I’m just wondering if we couldn’t design the exact same language that would benefit [communities other than Santa Fe and Albuquerque], and they were permanent jobs, and they were high wage jobs. But I don’t think we’d get that suppport because we’d see it as a budget buster. For whatever reason we don’t see this as a budget buster.”

Sen. George Muñoz, a conservative Democrat from Gallup, defended the credits. He argued they’re responsible for “essentially a half a billion dollars of cash flowing into the state that would not be here but for this tax policy.”