SANTA FE – The budget and accountability office of New Mexico’s Legislature is cautioning that the cost of film tax credit payments to producers such as Netflix could grow quickly and unpredictably in coming years.
A Legislative Finance Committee report on Tuesday said preliminary estimates indicate that new production commitments by Netflix, announced in November, could increase annual tax credit payouts by $25 million beginning next fiscal year.
The state expects to pay out nearly $100 million in film production tax credits in the coming fiscal year, starting in July 2021, and $147 million the following year.
Budget analysts say costs to taxpayers could quickly grow further through partnerships with the film industry, with no way for the state to mitigate spending.
“One example of which is Netflix, which recently announced doubling their production commitments – and that can increase film tax credit payouts,” Dawn Iglesias, staff economist at the Legislative Finance Committee, told a panel of lawmakers.
New Mexico offers a rebate of between 25% and 35% on in-state film production costs. In 2019, it increased incentive offerings to the film and television industry amid efforts to trim the state’s economic reliance on federal funding and oil and natural gas development.
That legislation also increases the reporting requirements to determine the effectiveness of the film production tax credit.
In November, Netflix announced plans to establish one of the largest production hubs in North America with an expansion of its existing studio complex in New Mexico.
The expansion plan calls for a total of $24 million in state and local economic development funding, and industrial revenue bonds would be issued by the city of Albuquerque to help reduce some taxes for Netflix.