Cut film credits to fill food tax veto hole, Jennings says

Considering the arguments over the amount of the fiscal and economic benefits created by using film production tax incentives to encourage this form of economic development in New Mexico, I found it interesting that during the last regular legislative session when Senator Keller introduced Senate Bill 47, which was intended to provide legislation intended to add economic impact reporting requirements (including tracking jobs created) for all of the state's $700 million worth of economic incentives (at least 30 are “give and forget” to various interests and companies), the N.M. film workers and their trade unions supported this measure, unlike Senator Jennings and Senator Smith, who along with Rep. Kintigh have for some time have been advocating capping and/or eliminating the incentives for film production, largely on the basis of lawmakers not having the information they need to see the impact of that particular industry on the state.
None the less, over their objections SB 47 was passed by the House and Senate and as a result is now awaiting the Governor's signature or veto.

I wish that Senator Jennings (and Smith) would stop beating this dead horse and wake up to the fact that the film industry has been creating a lot of jobs and income for New Mexicans. In fact, if they're so worked up about tax incentives why aren't they looking at the ones they've given to their friends in the oil and gas industry?

Senator Jennings knows that the benefits from N.M.s film production tax credits don't just "go to people from out of state” since every time he's introduced legislation intended to cut or eliminate our state's film production tax incentives New Mexican film workers, representatives from the four local trade unions that represent them (over 4,000 members) and the state Film Office, along with owners of local businesses that provide services to the industry and representatives from trade associations for other NM businesses (that among other things provide lodging, meals, materials and rental vehicles and construction equipment to filmmakers) have presented him with substantive information concerning the overall economic impact and fiscal benefits to New Mexicans that result from our using tax incentives to draw the film industry to New Mexico.

Senator Jennings and the Legislature were on those occasions also provided with expert testimony that showed how production activity now takes place in direct proportion to the amount of incentives available and the extent to which the level of activity that our state's incentive program has created would decline as a result of cutting the incentives due to a shift of film and TV production activity to other states that offer industry incentives. In fact the production industry is now highly mobile, so within days of an announcement early last year that NY had run out of tax credits, production companies began looking elsewhere and ceased to work in that state. The resulting job losses,
increase in unemployment claims, loss of economic activity and decline in tax revenues that were directly attributable to the loss of production incentives caused the New York legislature to then enact a $350 million expansion of their incentives.

I suppose the thing which is most confounding about the repeated efforts that Senator Jennings and Smith have been making to cut or eliminate New Mexico's production incentives is that their concept of the state being able to somehow recapture 'unrealized revenue' by cutting the incentives that create this revenue possible is at best counter intuitive. In fact there's every indication that cutting the incentives would result in fewer goods and services being purchased in New Mexico and that this would correspondingly effect the amount of tax revenue resulting from this activity, as well as that which would otherwise be derived from the associated increases in economic activity that the presence of this industry in N.M. creates.

Unfortunately there are those who continue to insist that this is just conjecture and the information concerning the economic and fiscal impacts of the state's film production tax credit which was prepared for the Film Office and State Investment Council is flawed. However it seems to me that even if there was some short-term gain to be had by attempting to recapture unrealized tax revenue by cutting the film incentives, taking the larger risk of our losing an industry (which happens to one of the few in the U.S. providing an export surplus) that's growing and prospering in our state when many of our other businesses and industries are struggling is completely nuts.

Senator Jennings is mistaken in his assertion that all of the benefits from New Mexico's film production tax incentives go to people from out of state and ample evidence of this was provided to him during the last regular legislative session.
It is important to note that the 25% refund is only applied to the state taxes on the goods and services which qualified production companies have already purchased in New Mexico. Also that If the tax incentives are cut the amount of production which has been taking place in our state will diminish considerably, primarily as a result of the fact that in today's economic environment film and TV producers are compelled to go to where ever they can cut their production costs, which is what the incentives do. Cutting the incentives will result in fewer goods and services being purchased in New Mexico and the amount of tax revenue, as well as the overall economic benefits to New Mexicans, that results from this activity will decline correspondingly.
Unlike taxing things that you and I routinely consume, cutting our film production tax incentives will not result in any net gain in tax revenues but in fact reduce or even eliminate them.
Accordingly, any suggestion or hope that doing this will result in the state being able to recapture 'unrealized revenue' (from business activity that won't take place) is absurd.