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House Dems Target Film Rebate Cap

SANTA FE – The debate over New Mexico’s film rebates is not over.

A number of House Democrats want to get rid of a $50 million cap on yearly rebate spending for film and TV productions, arguing the policy – adopted last year – has stifled one of the state’s healthiest industries.

At a glance
House Bill 85, sponsored by Rep. Al Park of Albuquerque and other Democrats, would do away with spending limits on film rebates approved last year by the Legislature. It would leave in place other restrictions adopted in 2011, including limitations on vehicle and lodging rebates for the film industry.

“We’re trying to undo some of the bad mistakes we made during the 60-day session,” said Rep. Brian Egolf, D-Santa Fe, alluding to the 2011 legislative session.

A bill backed by Egolf and other Democrats that would repeal the cap could be discussed in legislative committees as early as this week.

However, Gov. Susana Martinez, who pushed for the film rebates to be trimmed last year, says the annual cap gives the state more budget certainty while still keeping New Mexico’s film incentive program intact.

A Martinez spokesman said Friday that the first-term Republican governor will oppose the effort to do away with the annual spending cap.

“The current film subsidy cap provides much needed predictability in the state budget, and it was part of a budget agreement that achieved bipartisan support, as we worked to protect classroom spending and health care services for those most in need last year,” Martinez spokesman Scott Darnell said.

Meanwhile, another legislator, Rep. Dennis Kintigh, R-Roswell, wants to get rid of the film incentive program entirely. His legislation, House Bill 117, would gradually phase out the rebates by 2037.

New Mexico’s film incentive program currently offers a 25 percent rebate to film companies for most direct, in-state expenditures. Under the changes approved last year, those rebates can be paid out over a period of three years.

After taking office last year, Martinez repeatedly labeled the rebates “Hollywood subsidies” that chewed up state dollars that could otherwise be used on cash-strapped programs, such as public schools and Medicaid.

The administration’s tone seems to have mellowed, if only slightly, in recent months, with Martinez’s chief of staff Keith Gardner telling the audience at a November industry association event, “We are open and friendly for the film business.”

State officials and industry insiders say last year’s Capitol debate caused a downturn in moviemaking activity, as film studios waited for the political dust to settle.

However, the state Film Office recently announced that a remake of the classic TV show “The Lone Ranger” will be filmed in New Mexico, starting next month.

The high-budget film, starring Johnny Depp as Tonto, will be shot in and around Albuquerque, Santa Fe and Shiprock.

While some critics have questioned the cost-effectiveness of state film rebates, Egolf said the legislation signed into law last year sent a negative message to the film industry.

He said film and TV productions that are shot in New Mexico benefit the state on several fronts, especially during tough economic times.

“Not only is it a moneymaker for the state’s general fund, it’s also a job creator,” Egolf said.

A pair of studies on the impact of the state’s film incentive program have generated starkly different conclusions: One found the rebates bring in more tax revenue than they cost the state, and the other found the state receives just 14 cents in revenue for every $1 spent.

New Mexico ended up paying out $102 million in the last budget year before the cap took effect, the most the state had ever spent in annual film incentives. Just five years earlier, the state paid less than $8 million in film rebates, according to the Taxation and Revenue Department.
— This article appeared on page A1 of the Albuquerque Journal