February 20, 2019

Governor pushes for payoff of film credit backlog

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Tamara podolchak

CC via Wikimedia Commons

Gov. Michelle Lujan Grisham wants state legislators to allocate up to $380 million to pay off a backlog of tax credits owed to production companies that shot movies or television shows in New Mexico.

Tripp Stelnicki, a spokesman for the governor, said the buildup of unpaid rebates “creates an uncertainty in the minds of producers. The governor prefers to get this done as quickly as possible.”

Paying what’s owed would require a one-time appropriation from the general fund, said House Speaker Brian Egolf, D-Santa Fe, who met with the governor on Tuesday.

As it stands, New Mexico’s tax incentive program for qualifying movie-makers only allows state government to pay out $50 million of rebates in any given year, regardless of how much was accumulated.

The idea of paying down all the rebates comes as the House of Representatives prepares to vote on a proposed $7 billion budget. It would be an 11 percent increase over this year.

And two proposals — Senate Bill 2 and House Bill 654 — seek to eliminate the $50 million annual ceiling on tax credits for the industry.

Lujan Grisham has voiced her support for the Senate bill. It is sponsored by Sen. Nancy Rodriguez, D-Santa Fe. Stelnicki said the governor’s administration was not familiar with the other bill, introduced last week by Democratic Reps. Antonio “Moe” Maestas of Albuquerque and Jim Trujillo of Santa Fe.

Upon taking office this year, the governor said she wanted to “take off the shackles” of the film industry so it could blossom.

Filmmakers can qualify for 25 percent tax rebates on qualified expenses for projects shot in New Mexico. Television production companies that bring long-term series to the state can receive rebates of 30 percent.

These tax credits are paid by the state in varying formulas.

Rebates under $2 million are paid immediately. For rebates up to $5 million, a production receives 50 percent immediately and the rest a year later.

Those qualifying for more than $5 million in rebates receive the money in three equal installments over at least two years.

New Mexico’s incentive program to land movies was signed into law in 2003 by then-Gov. Gary Johnson, who was a Republican. His successor, Democratic Gov. Bill Richardson, expanded it.

But interest in New Mexico as a location for movies and television shows cooled after Gov. Susana Martinez took office in 2011. Martinez, a Republican, said she did not want to help Hollywood at the expense of the state’s schoolchildren.

Critics of Martinez countered that the only way a filmmaker could qualify for a tax credit was by bringing his production to New Mexico. And businesses ranging from hotels to dry cleaners urged Martinez and legislators not to alienate the movie industry, saying it was creating jobs and contributing to the state’s tax base.

Martinez eventually embraced the movie industry after state studies showed it was a plus for the economy.

Last February, for example, Martinez said movies and television productions had contributed $387 million to the state’s economy in the previous year alone.

Film industry advocates got a shot of positive news in October when Netflix announced that it planned to buy Albuquerque Studios and turn it into a production hub. The company estimated in the coming decade this would mean up to $1 billion in productions in New Mexico and thousands of jobs.

Egolf said the Netflix deal has “changed the dynamics of film-making” in New Mexico, but state leaders don’t want the company to take up all the rebate money available for qualifying productions.

“We’re thrilled to have Netflix here, but we’re wrestling with it,” he said.