Scrapping film industry tax credit, take 5
Republicans tried again to kill New Mexico’s film incentive.
Rep. Larry Scott, R-Hobbs, said he’s alarmed at the state’s “significant liability” for future payments and the “significant upward trajectory” of the liability. That inspired Scott and other Republicans to introduce House Bill 237 to end the incentive.
Scott hoped for a robust discussion of numbers when he presented the bill to the House Commerce and Economic Development Committee recently. Instead, he faced a roomful and a Zoomful of opponents but zero supporters.
HB 237 deserves a robust discussion, but threatening to blow up the industry isn’t exactly an ice breaker.
New Mexico offers a 25% to 35% production tax credit for film, TV, commercials, and other forms of media made in New Mexico. We’re one of 35 states with film incentives.
What we’ve gotten, said state Economic Development Secretary Alicia Keyes, is 8,000 jobs with a median wage of $32 an hour. The industry has spent $1.5 billion in the last two fiscal years, for a return on investment of nearly $8 for every dollar the state spends. Spending in rural communities increased 660% thanks to an additional 5% credit for working at least 60 miles from the Bernalillo-Santa Fe county corridor.
Scott and his fellow sponsors, James Townsend of Artesia, Greg Nibert of Roswell and Randall Pettigrew of Lovington, argue that the state will owe $155 million for this year’s productions. Scott asks if that’s a good use of taxpayer dollars.
In a legislative analysis the state Taxation and Revenue Department explains that film makers wouldn’t be here without the credit. Pass HB 237 and only 8% of film companies would stay, according to a 2022 study.
No tax credit = no industry spending.
We’ve had this debate since 2009, when former Rep. Dennis Kintigh, R-Roswell, tried to kill the credit. In 2011 former Gov. Susana Martinez, a Republican, attacked the state’s “subsidy” of Hollywood. Film proponents rallied to save their jobs, which then numbered around 3,000. In the end they got a hard-fought compromise; lawmakers capped rebates at $50 million but retained the 25% rebate.
Martinez’s words had consequences. Projects cancelled or moved to other states. Film makers couldn’t be sure the rebates would be available because other productions might max out the cap. Hollywood decided we were not open for business. The fallout lasted a year.
For the HB 237 debate, workers testifying included actors, a set builder, film maker, travel agent, makeup artist, a lobbyist for hotels and car rental agencies, and two production facility owners. Their diversity is a hint of the industry’s impact.
Some of the comments: “This would take the bait off my hook.” “The money coming into New Mexico has fed my kids.”
A woman recalled Susana Martinez’s threats and said, “For a year, some of us didn’t work.” Each time legislators threaten the credit, “it puts us all on a roller coaster.”
“This bill would decimate the film industry in our state,” the Economic Development Department argues. And it would threaten public-private partnerships with Netflix, NBCUniversal and 828 Studios.
Rep. Patricia Lundstrom, who has a deep understanding of the numbers as former chair of the House Appropriations and Finance Committee, said she understood why Scott introduced HB 237. But on her motion, the committee tabled the bill on a 7-to-3 vote.
Scott said he harbored no illusions of getting the bill out of committee.
It’s not the end of the story. The governor is behind Senate Bill 12 to increase the annual cap on film credit rebates from $110 million to $210 million over the next decade. This would prevent the expected backlog in rebates. And she’s sweetened the deal by raising the rural credit from 5% to 10%.
We’ll still have the robust discussion Scott wants without frightening workers.
This article originally appeared on Carlsbad Current-Argus: Scrapping film industry tax credit, take 5
