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Film industry advocates take aim at rebate cap

November 20, 2018

The new governor wants to double New Mexico film and television production in two years.

That’s going to take some work.

Or, if you ask certain folks in the state film business, it simply takes state government getting out of its own way.

They say the road to a broader film economy begins in the 2019 legislative session, when legislators will consider tweaks to the state’s tax incentive program and how to goose an industry that advocates argue has been artificially constrained under eight years of outgoing Gov. Susana Martinez.

Although Gov.-elect Michelle Lujan Grisham has highlighted education and infrastructure investment as priorities, the state’s burgeoning film industry is also likely to play a supporting role in the 60-day session set to begin Jan. 15 as the industry senses opportunity in a new film-friendly governor with Democratic majorities in both chambers of the Legislature.

“I think any forward movement would be a good indicator for the film industry as a whole to say, ‘Hey, we’re open for business,’ ” said Doug Acton, business agent of the state film technician union, IATSE 480.

Square in lawmakers’ crosshairs will be the so-called cap, the $50 million ceiling on rebates the state can pay out to qualifying moviemakers each year.

The state’s film incentive program offers a percentage of money back from what qualified film and television producers spend in the state — 25 percent or 30 percent. Established in 2011, the cap has created a chokepoint for film and television producers, according to industry observers and legislators, who maintain the backlog of rebates will disincentivize producers who might be made skittish about when they can expect to realize their incentives.

Initiatives to raise the cap or remove it entirely have not advanced to the floor of either chamber in recent legislative sessions.

Lujan Grisham has said she wants it gone. “I’m focused on diversifying and strengthening our economy, and a large part of that is building the foundation for a lasting and growing film industry across New Mexico,” she said in a statement.

State Rep. Moe Maestas, D-Albuquerque, brought forward a bill to eliminate the cap last year; it died in the committee process. Maestas said last week he would bring back the bill in January.

“We need to lift the cap, as the economic impact of filmmaking in New Mexico far exceeds the credit itself.”

Industry players believe the circumstances are right for movement on the cap.

“Last few years, I think [legislators] were always fearful it would be vetoed anyway,” Acton said. “So why put a lot of effort into it? … If they increase the cap, it’s the opportunity for more New Mexicans to work within the industry. More companies, more productions will come here, and we’ll build more stages, and if they build more stages, there’s more jobs involved in that situation. To do that without a cap increase? I don’t know how that would work.”

But there will likely be a debate between the more aggressively film-friendly legislators and conservative Democrats about whether to remove the cap or raise it, the latter idea echoing the cap’s originating argument that the state should have some certainty in how much of the money spent by productions it will be refunding each year.

One outsize factor: The presence of Netflix, which recently secured a deal to purchase Albuquerque Studios and has said it aims to spend $100 million in the state each year for the next 10 years. That level of spending from one entity would eat up a hefty chunk of the cap all on its own.

“Without a doubt” there will be discussion on that subject, said Eric Witt, director of the Santa Fe Film Office. But either outcome would be better than the present situation, he said.

Raising or removing the cap is one of three “mission-critical” objectives legislators must undertake in 2019, Witt said, alongside addressing the backlog of film rebates owed to producers from past years and “resimplifying” the rebate program.

“In the past eight years, we’ve gone from being the most straightforward, easily understood and easily administered program in the U.S. to being what is now the most Byzantine incentive program in the U.S.,” Witt said. “We need to go through and clean out a bunch of the superfluous, extraneous stuff.”

The Santa Fe Film Office provides flow charts to prospective producers about certain minutiae in the state’s program. “Even I — and I wrote most of the original legislation — I don’t even understand it anymore,” said Witt, who served as a sort of film czar under former Gov. Bill Richardson.

Once those key items are addressed, the state can move on to strengthening the homegrown segments of the industry — like funding New Mexico filmmaker showcases and development programs.

No matter what comes to pass, a friendly posture to the industry is a cornerstone, advocates say, as producers have options in other states with rebate programs, such as Georgia and Louisiana.

“The potential for growth in film is unlimited in New Mexico,” Maestas said.

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