New Mexico legislators want to remove TV series from cap on tax incentives

Two Democratic lawmakers plan to ask the Legislature to revamp a $50 million annual cap on tax incentives for film and television production in New Mexico.

A newly issued study of the incentives has reignited a debate over whether it makes financial sense for New Mexico to offer tax subsidies to attract film and TV production.

Rep. Brian Egolf of Santa Fe said Wednesday he will introduce a measure in next year's legislative session to remove TV productions from the $50 million subsidy limit. The cap would remain for films.

"If we can do something to make the incentive program we have more attractive for TV jobs, then we should look at doing that," Egolf said. "We're going to be getting, I think, the longest-term bang for our buck by doing everything we can to get more TV series invested in New Mexico, hiring our folks year-in and year-out."

Senate Majority Whip Tim Keller of Albuquerque said lawmakers could raise the cap to allow for more TV productions or consider an adjustable cap that varies based on demand and available state finances.

Their comments came after the state Film Office issued a report on Tuesday that said film and TV production in New Mexico generated about $1.5 billion in economic output from mid-2009 through earlier this year. The industry received about $239 million in tax rebates during that time.

Gov. Susana Martinez isn't proposing changes to the film incentives, spokesman Enrique Knell said. However, Knell said the administration is looking for ways to attract more gaming and app developers to the state.

Knell said the study confirmed that New Mexico is competitive with other states in competing for TV and film projects. There has been an increase in TV programs filmed in New Mexico, and he said TV shows "provide a more long-term presence and additional opportunities for jobs and other forms of economic development."

The report said TV accounted for 10 of the 58 productions in New Mexico in the last fiscal year, up from four TV projects in 2011.

Film-production spending created almost 15,900 jobs, according to the state-commissioned study by a Canadian consulting firm.

"Fifteen thousand jobs and over $1 billion in economic impact — that's a heavyweight program doing a lot of good for New Mexico," Keller said.

But a critic of the subsidies contends the study validates the argument that tax incentives for the film industry are a bad investment. For each dollar in tax incentives granted by New Mexico, film production generated about 43 cents in state and local taxes, according to the report.

"The point is, if taxpayers are spending more than is being collected, it is not a good deal," said Paul Gessing, president of the conservative Rio Grande Foundation.

New Mexico offers a 25 percent tax refund for qualifying film and TV production expenses, such as set construction and film crew salaries.

The governor and the Democratic-controlled Legislature agreed last year to sweeten the incentive by an extra 5 percent for TV series and certain film productions, providing up to a 30 percent rebate.

The Legislature approved the $50 million cap on film incentives in 2011 as a compromise with Republican Gov. Susana Martinez as part of a package of measures to plug a budget shortfall. The governor initially pushed for lowering the rebate on film production expenses to 15 percent.

Knell said the cap provides for "greater predictability and certainty in the state budget, which allows for better planning and funding of everything from public education to health care programs for those in need."

The film industry has received nearly $405 million in tax refunds since the incentives were enacted in 2002. The film-tax refunds peaked at $96 million in 2011.