New Mexico’s Film Tax Subsidy Program Continues to Take on Water

New Mexico’s Film Tax Subsidy Program Continues to Take on Water

Lawmakers in New Mexico are in a self-imposed quandary. They’ve adopted a lucrative tax credit program for the film industry they simply can’t afford yet can’t walk away from.

The Enchantment State dolls out 25-30 percent rebates for production related expenses up to $50 Million a year. This spending cap is one of the only mechanisms of restrain in the program which is financed straight out of the state’s general fund.

Pressure to uncap the program has mounted due to New Mexico owing $380 Million in backlogged credits. If these trends continue – this debt will grow to $700 Million by 2023 – and a film claiming a credit, then wouldn’t be reimbursed for up to 14 years.

Now Governor Lujan Grisham and lawmakers want to make a one-time payment to clear this backlog as well as remove the annual spending cap so they can have the ability to throw unlimited chum in the water to lure Hollywood sharks.

Only two other states in the country have uncapped their film subsidy programs: Illinois and Georgia. The irony of Georgia’s unconditional love for Hollywood is manifold. The state’s program is rife with abuse. Warner Brothers defrauded the state by charging them $600,000 for an airplane never used in the movie “Sully.” And yet this didn’t stop an award-winning display of hypocrisy when Hollywood stars called for a boycott of Georgia when a Republican Governor was elected. For a state that calls themselves “Y’allywood,” they were harshly reminded that despite spending $200 Million a year on extra caviar money for film stars, when it comes to the real insider VIP party, they’re not on the list.

States are tripping over themselves to throw money at the rich and famous for an industry whose loyalty cannot be bought. They will happily continue to jet-set around the world anywhere the highest-bidding government will pay them for honor of their appearance. The political ridicule they throw in for free.
New Mexico lawmakers are doing their best to pretend they aren’t completely owned by their starlet masters. Their bill also includes razzle dazzle “reforms” including tightening up for what expenditures can be reimbursed (a notoriously abused standard.) And what one would think is a laugh line, requirement for better acknowledgments of New Mexico in the film credits… A little more “limelight” is what New Mexico taxpayers are getting for the promise to dole out hundreds of millions to entitled movie makers.

Despite the flop of film tax credit programs around the nation, states continue to fall for this fool’s errand. Just this year a bill was introduced by Representative Bob Thorpe at the Arizona legislature to divvy out some of the state’s business tax credits to film production. Luckily the bill didn’t get traction.

However, if there is any lesson to be learned by lawmakers in Arizona from New Mexico – it is once you start feeding the lions – they become more voracious – it becomes harder and harder to stop. And for states that think that will keep the lions from biting – think again.