INCENTIVE FIGHT
State sees record production and direct spending, officials eye change to $50M cap
Legislators work to keep and improve the state’s film package.
SANTA FE — New Mexico has spent at least $500 million over the past 15 years as part of an incentive program that’s made the state a leading location for movies and television shows, according to state records.
And the spending might have climbed even higher if not for a $50 million-a-year cap on the tax credits — signed into law at Gov. Susana Martinez’s insistence in 2011 to provide budget certainty and control costs.
The state hit the $50 million limit in each of the past four years for which information is available, according to New Mexico’s most recent tax expenditure report.
Supporters say the money is well worth it. “We are creating good-paying jobs throughout New Mexico to keep our best and brightest here,” said Jon Hendry, a union leader who represents film workers.
Overall, film production has increased in New Mexico over recent years, with 52 productions featuring budgets of $1 million or more — including movies, TV shows and music videos — filmed in the state during the 2017 budget year. That was up from 30 such productions in fiscal year 2016 and 25 in fiscal year 2015.
The state also topped its own record for film industry spending for the third year in a row, with $505.9 million direct spending, an increase over the $387 million spent in fiscal year 2016.
Matt Geisel, New Mexico’s secretary of economic development, said Martinez and lawmak-
ers have worked together to improve the program “while maintaining a reasonable cap” on the total incentives.
“The changes made to the credit have helped spur more direct spending into New Mexico’s economy by attracting extended television productions to New Mexico — creating more jobs and bringing three record-breaking years of film to New Mexico,” Geisel said in a written statement. “It’s critical that we continue to maintain this important economic development tool while setting reasonable limits on spending.”
Before the $50 million cap was imposed, the state had two years in which the tax incentives reached far beyond that level — $82.1 million in the 2009 fiscal year and $96.2 million in 2011, according to state records.
The $50 million cap is already emerging as a campaign issue in this year’s race to replace Martinez as governor.
Two Democratic candidates — Michelle Lujan Grisham and Jeff Apodaca — have already said they’d push for changes. Lujan Grisham said she would raise the cap or eliminate it, while Apodaca has said he’d scrap it altogether.
Whether the incentives are worth it, of course, remains a matter of some dispute.
The Rio Grande Foundation, a libertarian-leaning advocacy group, has repeatedly slammed the program as an unwise subsidy for the film industry.
In 2015, the group called the program a “hugely expensive way for taxpayers to generate a relatively small amount of economic activity.”
A 2014 study by the Canadian accounting firm MNP estimated that New Mexico’s film industry provided thousands of jobs and generated $1.5 billion in total economic output over a four-year period.
But it also found that film production activity generated an estimated 43 cents in tax revenue for every incentive dollar spent by the state between 2010-14.
A subsequent study by MNP said the industry paid wages higher than the state average and that state residents accounted for 74 percent of all positions filled by film production during a five-year period the company analyzed.
New Mexico offers a 25 percent rebate to film companies for most direct, in-state spending. Long-running television programs can qualify for an extra 5 percent, or 30 percent altogether.