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SANTA FE — Lawmakers are trying to reach a compromise with Republican Gov. Susana Martinez on a $5.4 billion state budget and a proposal to trim the state’s film incentives, House Speaker Ben Lujan said Tuesday.
Lujan said a proposal is being developed to limit the amount of subsidies provided yearly for film production in the state. There also could be new restrictions on the type of film expenditures that qualify for a tax break. The film subsidies cost the state about $65 million last year.
Money saved from film subsidy changes could be used to meet the governor’s objections to the proposed budget, which will cut state spending by about 3 percent next year.
Martinez met with House Democratic and GOP leaders earlier Tuesday and told them the budget will cut too much from public schools, Medicaid and corrections. The governor wants lawmakers to reduce the film production tax credit, which she contends would save an estimated $25 million that could be used to offset the cuts to education and health care.
“Those cuts are too deep and leaving the film subsidy alone — not good enough,” Martinez told reporters.
During her gubernatorial campaign, Martinez pledged to protect schools and Medicaid from budget cuts.
The House had been expected to debate the budget on Tuesday but that was called off after the legislative leadership meeting with the governor. The budget measure was sent back to the Appropriations and Finance Committee, which will allow lawmakers to revise some of the spending proposals if an agreement can be reached with the governor.
Martinez said the decision to return the budget to the committee “gives us an opportunity to have a dialogue” with lawmakers.
The film subsidy is shaping up as a political flash point in the legislative session.
Supporters of the film incentive contend it has helped to attract more movie and television production work to New Mexico, creating jobs and boosting the state’s economy. New Mexico provides a 25 percent rebate for direct film production expenditures in the state.
Martinez insists the subsidy should be cut to 15 percent and she portrays her proposal as a choice between Hollywood and potential money for schools and services to New Mexicans.
Film industry supporters say cutting the subsidy to 15 percent will discourage film projects from coming to New Mexico.
Lujan said, “We feel this is a viable industry and provides jobs. We don’t want to send the wrong message, but if we can tighten what it is that we are providing expenditures for, we are willing and open to do that.”
He said Republicans and the film industry are part of the talks on developing a compromise proposal for reducing the subsidy.
The budget differences are relatively narrow between the committee’s proposals and spending recommendations the governor made to the Legislature last month.
The committee proposed spending more than $2 billion on public schools and other education programs next year — about $9 million less than the governor had recommended.
On Medicaid, the committee-approved measure provides about $860 million for health care to the poor and uninsured children — about $7 million below what the governor had proposed in her budget.
The committee budget provides almost $255 million for the Corrections Department, which is not quite $5 million lower than what the governor’s budget had recommended. The Martinez administration has warned that it might have to close some prisons without more money for the department.
Overall, the committee’s budget spends about $43 million less on general government operations and education than Martinez proposed in her budget recommendations.