Members of the House Labor and Economic Development Committee voted 6-5 in favor of the legislation, with Democrats voting for it and Republicans against it.
“Film works – there is a specific and direct correlation on the money we spend on these incentives and the return we get,” said Rep. Bill McCamley, D-Las Cruces, the panel’s chairman.
But skeptics of the legislation, House Bill 113, described it as a possible “budget-buster” in future years.
“I’m trying to understand why a certain industry should be such a winner,” said Rep. Rebecca Dow, R-Truth or Consequences. “It seems like we’re going to give a tax credit to some of the wealthiest people in the world.”
New Mexico currently offers a 25 percent tax rebate to film companies for most direct, in-state expenditures, although long-running television programs are eligible for an additional 5 percent – or 30 percent in all.
Gov. Susana Martinez, who is term-limited and will leave office at the end of this year, signed 2011 legislation that enacted the annual limit on film rebate spending, which had been steadily increasing in previous years. She has since signed into law several other film-related bills, including a 2013 measure that expanded the subsidy for certain types of productions.
However, some film industry executives say the annual cap has hobbled the industry and prompted some productions to go elsewhere.
“The cap is having a hugely damaging effect on the film industry,” said Matt Rauchberg, a senior vice president at Albuquerque Studios. “The best people are going to Georgia because they know they can work there every day of the year.”
A 2014 state-sponsored study concluded that film production activity – both movies and TV shows – generates an estimated 43 cents in tax revenue for every incentive dollar spent by the state. It also found that 15,848 full-time jobs were created by the film industry during a roughly four-year period.
A Martinez spokeswoman said the Governor’s Office has not reviewed the bill, and top state Film Office officials did not attend Wednesday’s committee hearing.
With Martinez set to leave office soon, several Democratic candidates for governor have already said they support doing away with the annual film rebate spending cap.
“We want to pass it this year, but if not it kicks off a wonderful dialogue among state legislators,” Rep. Antonio “Moe” Maestas, D-Albuquerque, the bill’s sponsor, told reporters after Wednesday’s hearing.
The proposal now advances to the House Taxation and Revenue Committee.