Gov. Michelle Lujan Grisham said she was going to take the “shackles” off the state’s film industry by removing an annual $50 million cap on tax rebate payouts to eligible production companies that film in the state. While she didn’t exactly get her wish, Senate Bill 2 comes close. It increases that cap from $50 million to $110 million, appropriates $225 million to pay off a backlog of film tax credits owed to production entities and, to sweeten the deal, offers another 5 percent in tax rebates for productions that shoot in rural areas. The House of Representatives voted 41-24 to approve Senate Bill 2 after a nearly three-hour debate around 3 a.m. Friday. One Democrat, Candie Sweetser of Deming crossed party lines to join 23 Republicans in opposing the initiative.
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.
Gov. Susana Martinez stood on a sound stage in Albuquerque last summer crediting the film and television industry with injecting a record $505 million into the New Mexico economy over the previous fiscal year. But will the governor who sought to cut tax rebates for filmmakers when she first took office go along with a bill to lift the current cap on incentives, a measure that some say would provide an additional boost as the industry continues to prove a particularly busy part the state’s economy? Democratic legislators are pushing a bill that would eliminate the $50 million cap on the annual total of tax rebates the state provides film and television producers working in New Mexico. In an unusual inversion of the Legislature’s typical partisan dynamics, Democrats argue it would be a boon for business but Republicans contend it could strain the state’s budget and amount to a giveaway for out-of-state businesses. So even though the proposal, House Bill 113, passed its first committee on Wednesday, it only did so on party lines, casting doubt on whether the Republican governor would support it.
A proposal to boost New Mexico’s maximum annual payout of tax incentives for film and television productions moved forward Friday afternoon with a do-pass recommendation from the House Business and Industry Committee, despite legislators’ vexation over a mathematical error in the bill’s text. Legislators of both parties expressed support for New Mexico’s growing film industry, though some cautioned against the perception that the state might prioritize these incentives while lawmakers struggle with pressing budget concerns. “We just cut education twice — in the special session, we just cut it a few weeks ago, and we’re getting ready to cut it again,” said Rep. Tim Lewis, R-Sandoval. “Three times. My constituents are like, ‘Can we at least freeze the film industry in these difficult times?'”
However, backers of the bill characterized the proposed increase as an investment by the state and an adjustment for inflation.