Blog - Madcap Legislation

Statement

At a time when our state is facing major revenue shortfalls and increased unemployment, it is baffling that there are continued attempts in the legislature to cripple one of the only local industries that is experiencing growth, bringing money into New Mexico and creating jobs--the film industry.

Despite the defeat of a bill to repeal the state's film incentives last week in a House committee, Senate Bill 235 has now been introduced -- a bill which threatens the state's thriving film business by placing caps on production tax credits. Caps would effectively eliminate the industry in the state.

The level and structure of our production incentives have been fundamental in building New Mexico's film industry. Since 2003, they've attracted more than 130 major film and TV productions to our state, with an economic impact of over $3 billion. Today there are more than 10,000 direct and indirect film-related jobs in New Mexico, more than 250 businesses and services directly related to the industry, and thousands of additional businesses that provide support services and supplies.

In 2009 New Mexico paid out approximately $80 million through its program of a 25% refundable tax credit on film production. That means to get that amount back, production companies had to spend at least $320 million (in fact they spent more) on New Mexicans employed as cast or crew (jobs), and goods and services provided by New Mexico companies. The political rhetoric against the incentives focuses exclusively on the credits paid out while completely ignoring the money coming in -- rather like a business reporting only the cost of goods sold while ignoring the revenue from the sale of those goods, an unbalanced ledger if ever there was one.

Additionally, that $320 million in direct cash infusion into the local economy -- on building supplies, food, lodging, transportation, landscaping, rents and leases, personal services such as child care, security, fire control, accounting, staff and crew, and all performed by New Mexicans and New Mexico companies -- generated $120 million in state and local taxes. Simply put, $80 million in tax credits paid out vs. $120 million in taxes taken in made for a net profit to the state of roughly $40 million.

With that kind of return on our money, one can't help but wonder why any lawmaker would want to throw it away, especially as the legislature scrambles for every extra dollar to balance the budget, shore up a fragile economy, and prevent cuts to essential services like education, health care and public safety.

Credit caps would severely hamper the state's efforts to bring new productions to the state and to promote local production from within. They send the wrong message to industry, particularly those entities looking at New Mexico for long term investment in productions and production infrastructure. The bottom line is this: Fewer productions coming here means fewer jobs, less money spent at New Mexico businesses, and less revenue for the state during economic conditions when we can least afford it.

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