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Hollywood’s long con on N.M. taxpayers

September 16, 2018

Enjoying the new season of Better Call Saul? If not, you should be — you’re paying for it.

Annually, New Mexico’s taxpayers spend $50 million to “incentivize” film and television production in their state. Unfortunately, after shoveling more than half a billion dollars Hollywood’s way over the years, the Land of Enchantment has little to show for its generosity.

The payoff from “investment” in the entertainment industry is dismal. Dozens of studies have been undertaken to determine the ratio of subsidization to tax-revenue generation. The Rio Grande Foundation has distilled the best research down to 14 analyses, conducted in states as varied as Pennsylvania, Louisiana, Oklahoma, North Carolina and Massachusetts. All were performed by either legislative auditors or tax departments, and not one was issued by Hollywood consultants, economic-development/film bureaucracies or ideological think tanks of any perspective. When taken as a whole, the 14 studies found the average “return” for a taxpayer dollar to be an appalling 23.6 cents.

The film-and-television lobby claims that the relationship between money spent and revenue raised is a bean-counting irrelevancy. It asserts that the economic impact of production is what matters. But once again, the data tell a depressing story. In 2016, Michael Thom, a public-finance professor at the University of Southern California, explored incentivization programs, examining “job growth, wage growth, states’ share of the motion picture industry, and the industry’s output in each state.” He found that “the only benefits were short-term wage gains, mostly to people who already work in the industry. Job growth was almost nonexistent. Market share and industry output didn’t budge.”

As Virginia’s Joint Legislative Audit and Review Commission recently noted, “The percentage of nationwide film production employment located in California and New York (67 percent) in 2016 has barely changed since 2001 (69 percent).” Some states have managed to attract “runaway” productions from time to time, but at tremendous cost. That’s why several — including Michigan, Alaska and Florida — have scrapped their subsidies altogether.

More could follow. In January, West Virginia’s legislative auditor recommended “terminating the Film Tax Credit Program.” In March, Rhode Island’s Department of Revenue concluded that the performance of the “Motion Picture Production Tax Credits” program, when “measured against statutory objectives,” was “relatively poor,” and that it “has not achieved a lasting, stable motion picture industry.”

Ditto for the Land of Enchantment. At the start of the new century, jobs in motion-picture and video production here numbered just a few hundred. That figure rose dramatically, once the subsidies began to flow. By 2008, 2,389 men and women worked in the industry. But that was the high point — a decade later, it has yet to be surpassed. And “below-the-line” gigs continue to dominate. Highly paid “key creatives,” such as producers and writers, don’t live and work in the state. And post-production employment is essentially nonexistent. (For example, Better Call Saul “post” services are handled by Keep Me Posted, a firm based in Burbank, Calif.)

Perhaps the most pernicious aspect of New Mexico’s giveaway to film and television is its diversion of taxpayer dollars for politics. It is difficult to discern where the New Mexico Film Office stops and the militantly political Local 480 of the International Alliance of Theatrical Stage Employees (IATSE) begins. At the start of the film office’s February “Education Summit,” an office employee brought in a case of water bottles that each bore the union’s logo. That’s correct — she was literally carrying the union’s water.

The Rio Grande Foundation has attended most of the presentations sponsored by the film office’s “Educational Speaker Series” this year. IATSE-approved political content has been frequent. In July, Bobbie Shelton, founder of the Casting Coffee Group, a networking community for extras, charged — in a taxpayer-funded building — that while Democratic gubernatorial candidate Michelle Lujan Grisham is “pro-film,” her Republican opponent, Steve Pearce, “says he is, but he’s not.”

New Mexico has lavished a disturbing amount of largesse on an industry that comes to the Land of Enchantment for one reason only: free cash. How much longer should the state’s hardworking citizens pay for the failed dream of “Chilewood”?

D. Dowd Muska is research director for the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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