Copyright © 2019 Albuquerque Journal
SANTA FE – New Mexico’s use of tax incentives to bolster the state’s economy shows no signs of slowing down.
But Economic Development Secretary Alicia Keyes told members of a legislative committee Thursday that the state is taking a new tack when it comes to how tax incentives are targeted, saying they will no longer be used to lure call centers and other types of lower-paying jobs.
“That’s not going to be our focus – our focus is going to be the higher-paying jobs,” Keyes told members of the Legislative Finance Committee during a meeting in Portales.
Specifically, Keyes said, companies that could be targeted by the state include those in the aerospace, outdoor recreation and renewable energy sectors.
Overall, although New Mexico’s unemployment rate dropped to 4.3 percent as of April, average state wage levels have fallen further behind those of other states in recent years, other top state Economic Development Department officials said Thursday.
In an attempt to address the issue, Keyes said, the state needs to invest more resources in local startup companies, along with a more targeted recruitment campaign of higher-paying firms outside New Mexico.
“We don’t think we have a job problem, per se,” Keyes told lawmakers. “We feel that we have a wealth problem.”
There’s also the state’s film industry, which is poised to expand its presence in New Mexico after lawmakers approved a bill this year that more than doubled the annual spending cap on film rebates, among other changes.
The film industry has also been a beneficiary of increased spending from a state economic development “closing fund” that’s intended to help lure out-of-state businesses to New Mexico and assist local businesses in expanding.
In the current budget year, New Mexico has appropriated nearly $26.9 million from the fund – known as the Local Economic Development Act – for 15 projects around the state, according to EDD data. Combined, those projects represent nearly $1.2 billion in private investment.
The $26.9 million figure includes $10 million to facilitate a Netflix studio deal in Albuquerque but does not include the $7.4 million the state has pledged for a NBCUniversal film and TV studio project, also in Albuquerque, that was announced last week.
Even without the NBCUniversal project factored in, the total amount of money spent is already higher than the amount appropriated in any of the five previous years. In the 2018 budget year, for instance, the state spent about $10.6 million in LEDA funds.
Keyes said the Legislature’s approval this year of up to $75 million for the closing fund – a record high dollar amount for the program – could pay lasting dividends.
“This is going to add energy to our economy that has not been here in years,” she said during Thursday’s meeting.
However, some lawmakers expressed misgivings about the state’s generous use of tax incentives to catalyze film industry activity in New Mexico.
“I want the film industry to be here, but it’s very expensive for us,” said Sen. Jim White, R-Albuquerque.
In addition to the recently approved incentives, the state paid nearly $100 million this week in backlogged film rebates for films and television shows produced in the state, two state agencies announced Thursday.
The payments were authorized by this year’s legislative film package and are intended to largely eliminate a massive backlog that built up under the administration of former Gov. Susana Martinez, who left office at the end of last year.
“In New Mexico, we pay our debts, simple as that,” Gov. Michelle Lujan Grisham said in a statement. “These film and television producers made a commitment to our state, employing New Mexicans and providing an economic boost to all sorts of local companies in rural and urban communities alike.”
Even with the backlog payments authorized this week, Keyes said Thursday, there are still roughly $230 million in film credits claimed but not yet paid by the state.