By Dan Mayfield
Of the Journal
The film industry in New Mexico has dodged a bullet.
But is anybody reloading?
Earlier this month the Legislative Finance Committee heard— and voted down— a proposal to cap an important film incentive.
But the bid to cap the program has put the state's film industry on guard.
"This is a big deal," said Jon Hendry, business agent for the International Alliance of Theatrical Stage Employees, the national film workers union.
Hendry was among several dozen union members who packed the room to protest the cap.
The proposal would have capped the state's Film Tax Production Credit at $15 million every six months. That would mean that the rebate program, one of the hallmarks of the state's film incentive program, would be first-come, first-served.
That's rough.
Already, for the first five months of fiscal year 2008, the state has approved $30.4 million in rebates for 18 films. Though that sounds like a lot, the figure represents films that were made as far back as 2006 and only recently applied for their rebates.
But at that rate, the yearly cap would be exceeded in far less than six months, according to the LFC Newsletter.
The current rebate program pays up to 25 percent on all direct production expenses that are subject to taxation by the state. So, if your film company spent $20 million here, you could get a $5 million rebate.
"This is a refund, not a credit, on the full amount of the expenditure, not just the tax portion," reads the state's film Web site. "There is no minimum spending requirement, no cap and no sunset clause."
The rule of thumb is that if a company spends $20 million here, the state gets back three to four times that because the film production spurs spending by hiring New Mexico companies. That's stuff like truck drivers who buy tires, security guards who buy hand warmers or crew and cast renting cars and hotel rooms.
Filmmakers count on the rebate to reduce their expenses. But if the program is capped, they won't necessarily be able to count on it. What if the rebate program is tapped out when it comes time to make the film? What if a big production like "The Spirit" comes along— a coup for Albuquerque Studios in 2007— and there's no rebate money?
But the rebate program isn't cheap. LFC committee chairman Sen. John Arthur Smith, D-Deming, is asking whether the film industry is growing too fast.
Since the program began in 2002, the state has approved $70 million in rebates to film companies, according to Lisa Strout, director of the New Mexico Film Office.
That's a chunk of change.
Overall, the industry has directly spent $496 million here since January 2003, according to the film office.
So, is it worth it? That's Smith's question.
"It was not the intention to yank the carpet," Smith said. "When we start getting fiscal impact reports that this is what it costs, we have a concern."
Could other state programs generate as many jobs or stimulate the economy with that $70 million as the film industry?
Well, said Strout, jobs are a tough number to nail down. Film jobs are measured in worker-days. Film folks will work on several films, commercials or television shows in a year, and that can add up to several "jobs" for one person. So, the film office measures days on the job.
In 2004, Strout said, the state measured 36,198 film worker days over seven films. That number grew to 159,841 days in 2006 for 20 productions. Last year's numbers aren't tallied yet, but because there was a record number of films shot in the state in 2007— 21— it's expected to increase.
The average film hires 120 to 300 workers, Strout said.
The LFC is now going to work with the Governor's Office and the New Mexico Film Office to develop a study that will answer all these questions. That should be complete by summer.
From 2002 to 2004, the film tax rebate was only 15 percent. In 2005 the state bumped that to 20 percent, and in January 2006 it was again boosted, to 25 percent.
As the rebate increased and the film industry took off— the red flag was raised.
Though nobody saluted— the LFC voted unanimously not to support a cap on the rebate— this is a slap in the face of growing industry.
It doesn't look like the proposal will get any support at this year's 30-day legislative session, but the LFC has made it clear that the Legislature is looking for answers.
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