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A new study argues that New Mexico and 42 other states are wasting their money on film incentives.
“In the harsh light of reality, film subsidies offer little bang for the buck,” writes Robert Tannenwald, of the Center on Budget and Policy Priorities.
I give the study a thumbs-down for its biases and mistaken assumptions, but it’s another reminder that the incentive program isn’t well understood.
Tannenwald speculates that to pay for its film incentives, New Mexico “probably had to cut state services,” but it hasn’t happened. He claims New Mexicans are only getting the flunky jobs because “most locations in the United States (other than Los Angeles and New York City) lack ‘crew depth.’” Dead wrong. New Mexico is justifiably proud of its pool of well-trained crews, and out-of-state personnel aren’t eligible for the New Mexico rebate.
Most revealing, however was a recent exchange between Tannenwald and New Mexico industry professionals on their listserv. Tannenwald made it clear he thinks subsidies to any industry are wasteful and ineffective. New Mexico offers a 25 percent tax rebate on production expenditures and a no-interest loan for up to $15 million per movie.
Rebate mechanics: Say a filmmaker rents a room for $100 plus roughly $8 in gross receipts tax and $6 in lodgers’ tax. The state will rebate $28.50 but receive only $14; on the other hand, the film-maker has still spent $85, and what happens to that $85 is important. The innkeeper pays employees, suppliers and taxes. The filmmaker is also paying crews, restaurants, caterers, car rental companies, lumber yards and other suppliers and service providers, and they buy houses, build studios, rent space and pay taxes. Now we’re talking multipliers. That means if they eat in a restaurant and tip the waitress, those dollars will turn over several times before they leave your community. Economists can argue all day over multipliers, but it’s obvious there are secondary benefits.
There’s more. Economic development incentives exist to encourage activities, like manufacturing, that create good jobs. Policy makers assume and communities hope for beneficial multipliers. This may rest more on faith than proof, but just try to part economic developers from their tools.
Then there are the intangibles, such as our crew base. (Kudos to higher education around the state for the timely creation of training programs and facilities.)
Doug Bocaz-Larson, a film instructor at NMSU’s Grants branch, says: “I even feel the effects of the film industry in little Grants. There are way more opportunities for my students now than five years ago. If a student here works hard and really wants an opportunity, I can find them one now.”
Bottom line: Our incentives worked. They brought movies, TV shows and ads here, and the productions stayed because they found excellent crews, great scenery, sunshine, film-friendly communities, and studios. And we’re an hour flight from L.A. We now have standing. Which was the program’s goal all along.
This year, everybody’s got to sacrifice. Kill the incentives and some productions will stay but probably not enough to maintain an industry. Tinker carefully and save the state some money but preserve much of what we’ve got. One place to start is our no-interest loan program, which could become low-interest loans.
A game changer in the discussions will be Jon Barela, the governor-elect’s choice to head the Economic Development Department, which includes the Film Office. Barela most recently worked for Cerelink, a contractor to Dreamworks to provide remote computing services. Cerelink’s Website brags on New Mexico’s film incentives.
Periodically, I make a pitch to look after our golden geese – all of them. I’ve been making that little speech as long as I’ve been writing columns. When I no longer have to make it, I’ll know we understand what makes our economy tick.
NM News Services