SANTA FE — New Mexico’s generous tax incentives for film production supported thousands of local jobs and generated about $933 million in total economic output last fiscal year, according to a study released Tuesday by the state’s Economic Development Department.
The report by Olsberg SPI, a London-based firm, said each tax dollar spent on the film program resulted in about $8.40 in benefit to the state economy over the last two years.
In a presentation to state lawmakers, the company’s analysts didn’t address whether the program resulted in extra tax revenue for the state because of the additional economic activity. But they said it has a positive impact on the economy as a whole.
New Mexico offers a refundable tax credit of 25% for spending on state film crews, goods, services and other eligible expenses. The rate can be as high as 35%, depending on where it’s filmed, among other factors.
Eleanor Jubb, an economist and senior consultant at Olsberg SPI, said the overwhelming bulk of the film production in New Mexico is a result of the incentives. At least 92% of the activity wouldn’t happen, she said, without the incentives, according to the firm’s research.
Her firm calculated that each $1 invested in the program resulted in $8.40 in additional economic value.
“This is a really positive and significant return on economic investment,” Jubb said.
Legislators reacted cautiously to the report.
House Majority Leader Javier Martínez, D-Albuquerque, said he wants to ensure the tax incentives are effective and reaching the people who need it most, perhaps by targeting firms that establish headquarters and commit to New Mexico.
“When I start looking at the numbers,” Martínez said, “they make less and less sense as we move forward.”
Rep. Larry Scott, R-Hobbs, suggested the film incentives are too expensive for the state, given how little teachers make by contrast. He also questioned the study’s conclusions.
“My fear here is that we’ve set the foxes to count the chickens,” he said.
Jon Clark, a former economist for the Legislature who now serves as deputy secretary for economic development, said his department would welcome legislative funding for another study.
But Clark said Tuesday’s report already shows the incentive program delivers strong economic benefits to New Mexicans. About 8,000 jobs are associated with the industry, a number he said that’s almost certainly a severe under count.
And “these are very high-wage jobs,” Clark said.
Amber Dodson, director of the state film office, said New Mexico’s incentives are in line with what’s offered elsewhere and proving to be effective.
“We feel like we’re in a really good place where we are,” Dodson said.