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Mon January 10, 2011
NM film industry tax credits will be focus of coming legislative session
By Jim Williams
Santa Fe, NM – New Mexico lawmakers will gather in Santa Fe next week for a legislative session that's sure to be contentious, especially around the issue of spending and taxes. The state budget is once again in the red, and legislators will have a tough time cutting enough spending to balance it. But some lawmakers are aiming at film industry tax credits that were increased recently. At the same time, opponents of that idea call it a smokescreen. KUNM's Jim Williams reports.
Kintigh: We are subsidizing one industry to the detriment of the rest of the state, and it's improper. It's bad economics, it's bad public policy.
Williams: That's Dennis Kintigh, a Republican state representative from Roswell. He's sponsored a bill to eliminate the film industry incentive, which amounts to a rebate of 25 cents for every dollar spent in New Mexico on a production.
Kintigh: We have paid out in the last two years, 135 million dollars out of the public treasury. During that time we have raised taxes, we have raised gross receipts taxes, we have cut the pay of public employees, including teachers, and we have furloughed. And we have put the burden of this particular industry on the backs of every New Mexican.
Williams: Kintigh cites several studies, most of them done in other states, that he says show their return on investment for film tax credits has been in the 15 to 20 percent range. He did some checking and says he found that one-third of the companies receiving credits weren't listed with the state as corporations, and another third were out-of-state.
Kintigh: Who were these people, why did they get the money, what have they done to deserve the money, are all questions that could not be answered.
Williams: It's possible, though, that the same could be said about other incentives and tax credits given out by the state. Kintigh says he's willing to look at them too, but
Kintigh: None of them come anywhere close to this amount of money that's flowing out.
Egolf: They say nothing about the 400 million dollars in subsidies that the state gives to coal, oil, gas, and potash.
Williams: Santa Fe Democratic Representative Brian Egolf says Kintigh and others are choosing to ingore the collectively much bigger tax credits given to other industries.
Egolf: So there's a lot more to this than meets the eye. This is not so much a debate over the film business as it is another attempt by certain Republicans who are bought and sold by big oil and gas companies to attack spending that doesn't directly benefit their buddies in the oil and gas business.
Williams: Egolf calls the film industry a "bright spot" in the state's economy in a time when other sectors are struggling. He says between eleven and twelve hundred people are working in the industry, with more than two hundred new businesses that have benefited from the tax credit.
Egolf: For us to spend eight years, or ten years, investing in making this industry alive and vibrant, only to pull the plug now, in the middle of this recession I think is incredibly shortsighted. And it's one of the few things that is actually creating jobs and making money, why would you want to eliminate it? It makes no sense.
Williams: Egolf also slams studies quoted by Kintigh and other film industry incentive opponents, saying they used questionable methods and old data. And, he says, assertions that the money isn't being spent in a transparent way on New Mexicans are false: the information, he says, is available from the Taxation and Revenue Department. And he has a question for opponents:
Egolf: You know, why have you never demanded an audit of the 400 million dollars the state gives every year to established industries, namely oil and gas, coal, and potash. Why are we still subsidizing them to the tune of 400 million dollars, and there's no oversight, there's no auditing?
Williams: Governor Susana Martinez, on Monday, released her budget recommendations for the next fiscal year. In them, she suggests cutting the film industry tax credit from 25 percent to 15 percent to save about 25 million dollars. It's not clear whether compromise will be possible between supporters and opponents of the credits. The session begins Tuesday January 18th.