House Bill 237 proposes repeal of state film incentive program

Feb. 7—The New Mexico film industry continues to set records with the amount of money it brings into the state — including $855.4 million in the 2022 budget year.

Last month, MovieMaker named three New Mexico cities — Albuquerque, Las Cruces and Santa Fe — as part of their lists for the best place to live and work as a filmmaker.

Though the industry has drawn accolades, a proposal pending at the Roundhouse would repeal a film rebate program that's been a political lightning-rod over the last decade.

The repeal proposal, House Bill 237, is sponsored by four Republican state representatives — Larry Scott of Hobbs, James Townsend of Artesia, Greg Nibert of Roswell and Randall Pettigrew of Lovington.

It is scheduled to be heard in the House Commerce and Economic Development Committee on Wednesday and has already generated pushback from Gov. Michelle Lujan Grisham's administration.

"Yes, the state brought in $850 million dollars, but taxpayers wrote a check of about $155 million back towards the industry," Scott said. "In our tax policy meeting in November, we were told the film industry generated 2,6000 full-time jobs. If you do the math, each one of those jobs costs the state of New Mexico $60,000."

Tax incentives include a 25% to 35% production tax credit for film, TV, commercials, documentaries, music videos, video games, animation, postproduction and more.

The state's rural communities saw a 660% increase in direct spending from the industry, due to the rural uplift credit, which took effect in 2019 and gives a production a 5% incentive to film at least 60 miles outside of the Bernalillo and Santa Fe county corridor.

While his bill would undo those tax credits, Scott recognizes the film industry's success.

"The question I have is this an effective use of taxpayers dollars," Scott said. "Maybe it's time to revisit whether the subsidies are a good deal for the taxpayers. I know the opposition to this will generate a firestorm. We need to have this conversation."

The New Mexico Film Office opposes House Bill 237, arguing a competitive film incentive is foundational to a thriving film industry.

"In the past two years alone, the film industry has injected $1.5 billion of outside money into the state, and the median wage for a full-time resident crew member in New Mexico is $32 per hour," the film office released.

According to a recent study on the film incentive conducted by Olsberg—SPI , 92% of productions would not be in, or consider New Mexico, if not for the incentive.

Additionally, New Mexico's economy has benefited $8 for every $1 invested through the program, and the state has captured an estimated $86.14 million in gross receipts tax in two fiscal years.

"Eliminating the film incentive program would be devastating to the industry, our economy, our workforce, and our businesses statewide," the office stated. "With other states such as Oklahoma, Arizona and Colorado creating film incentive programs of their own, we need to stay competitive and continue building on our immense success. Otherwise, New Mexico will surely lose this industry and all its economic benefits."