Making Informed Decisions about the Film Incentives


There have been many robust debates on our state’s film incentive program.  Arguments have been made that the program is the single best economic development and job creation program in the state.  Others have contested the program costs too much, and exports money out of state.  The truth is we don’t need to have the debate.  The questions raised by the discussion have knowable answers.  We just need to track actual results from the program.  We can then use that information to make an informed decision about the benefits of the program. 

Rather than continuing the debate, I suggest we clean up the program, start tracking the economic impact, and require that the program truly helps New Mexican companies.  Over the summer, the Revenue Stabilization and Tax Policy Interim Committee worked hard on legislation to establish an accountability process for the film program.  Senate Bill 44 (SB44) would do just that. 

The measure would require implementing strong receipt tracking, local hiring, and accountability.  SB44 also requires increased film industry transparency and responsibility in advance of being awarded the state tax credit.  With its passage, we will be able to see actual, not estimated results; and not have to rely on one-off studies anymore.  With a little effort we can have a fact based assessment of the impact of New Mexico’s Film Production Tax Credit.

The industry’s own support of these measures speaks to their willingness to be proactive in putting to rest questions about the film program.  These measures will improve the program and makes the New Mexico’s Film Production Tax Credit a role model for incentives in New Mexico and nationwide.  Film professionals have worked on the details of this bill to make sure it is in step with what film companies can actually report. Executive agencies and legislative staff have cooperated to ensure what we are asking from our Government is responsible, doable, and fair.

Make no mistake; this bill is tough on film.  It requires receipt tracking, brick and mortar investment and formal reporting.  We need to be careful to not “throw the baby out with the bathwater,” and also ensure that our state is getting a positive return on our tax dollar investments.



Views: 4

Comment by Hunter on February 16, 2011 at 10:06am

Tim,

I absolutely agree with your appproach.  First and foremost, there has to be a consensus on the objective.  It has to be more than attracting film companies for location shoots.  That has been going on for years without incentives.  The objective needs to be the establishment of permanent film production infrastructure that can eventually be sustainable and weaned off incentives.  That cannot happen overnight.

We know where the production companies have spent their money.  (At least the Film Office knows.)  That information needs to be compared against the GRT and Income Tax filings of the alleged recepients of that spending.  Does the data show sustained increased economic activity, increased payrolls, increased tax payments.  Reliance on industry generated data is, unfortunately useless.  The industry has a long established history of so-called "Hollywood" accounting in which films that generate 100's of millions in revenue show a bottom line loss.  In the long run an established film infrastructure can be a great asset for NM, but only if it pays its own way.

Comment by Muskrat Sam Donaldson on February 16, 2011 at 6:31pm

Why do we need a law? Doesn't the state track exactly the kinds of things you are talking about? Silly me, I would think that in order to receive the 25% reimbursment the filmmakers would need to provide proof that the dollars were spent on goods and services subject to NM taxation. If not (and it would not shock me in the least) than the program needs to be canned and heads should roll.

Comment by Tim Keller on March 5, 2011 at 4:13pm
Muskrat, sorry so late on the reply.  Unfortunately our state does not track any of this right now.  Not just for the film program but also for all $1.3B worth of 107 different other incentives we have.   I have another bill to try and track all those so we need to do it as standard course of business, tragedy is to date we never have tracked any of this!

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