The New Mexico Senate voted Tuesday night to raise the limit on tax credits paid to the film industry and pay off a mounting backlog.
Senate Bill 2 has been a priority for newly elected Gov. Michelle Lujan Grisham and a burgeoning sector of the state’s economy that has brought a certain renown to New Mexico.
But budget hawks on both sides of the aisle have been wary of eliminating the current $50 million annual limit on tax credits, arguing that the state needs some sort of cap for reliable budgeting. And critics contend efforts to subsidize the film industry here just aren’t worth it and amounts to sending money to out-of-state corporations.
Still, when it came times to vote, the bill passed by a vote of 32-8, with several Republicans joining Democrats to back the measure.
The bill goes now to the state House of Representatives.
Under current law, qualifying film and television producers can claim a 25 percent credit for expenses in the state.
The program has been popular and lawmakers capped the amount of money the state could spend annually on the credit at $50 million. But in recent years, the state has ended up owing more, racking up a backlog of credits.
Sponsored by Sen. Nancy Rodriguez, D-Santa Fe, Senate Bill 2 would raise the cap to $110 million.
The bill also includes additional incentives for films and television shows shooting in rural areas. It also would allow the state to spend $225 million to pay off an existing backlog of tax credits while capping future backlogs at $100 million.
“It puts a responsible cap on the film credit,” Rodriguez said.
Some Senate Republicans questioned whether the incentives are really necessary as the state’s film industry matures.
“Over the years, we’ve developed a heck of a workforce,” said Sen. Sander Rue, R-Albuquerque. “Perhaps, over time, can we wean ourselves off of this rebate because we’ve created all these other reasons now for other companies to come to New Mexico.”
Others were blunter, contending the program amounts to a handout for Hollywood executives.
And some labor leaders have questioned why the state should spend money to pay off the film tax credit backlog now when it could spend more of that money on raises for workers, for example, or on one-time expenses.
But pointing to the arrival of companies like Netflix as well as productions that have flocked to New Mexico communities like Las Vegas, Sen. Jeff Steinborn said the incentive is key to a business that can help diversify New Mexico’s economy.
“We’re not sending money to Hollywood. We’re sending money to Main Street,” said Steinborn, D-Las Cruces.
