Inside the Capitol

Wednesday, February 02, 2011

2-7 Film Industry Survives First Test

Syndicated Columnist
SANTA FE -- The film industry cleared its first hurdle recently when it succeeded in getting Rep. Dennis Kintigh's bill to wipe out the rebate film companies receive for doing business in New Mexico.
The vote was along party lines with Democrats winning 5-4 in a House committee meeting held before a packed audience.
The next hurdle will be higher. Gov. Susana Martinez wants to lower the film rebate amount from 25 percent to 15 percent.
Industry insiders predict they won't have the luxury of going after a free-standing bill from Martinez. They think her effort will be tucked away in the general appropriations bill.
Insiders also believe their support will not be along straight party lines. A number of Albuquerque Republicans are well aware of the jobs and business film making brings to their districts. And many rural Democrats realize the industry doesn't help their area at all.
The urban-rural split is one of the problems faced by those supporting a big rebate to keep movie makers coming to New Mexico. Most of the action is in Albuquerque and Santa Fe where the labor pool is.
Companies that have ventured to smaller towns usually are greeted with open arms but occasionally neighbors complain that the activity disrupts their quiet lifestyle.
Some states have bumped up rebates for filming in rural areas. Michigan is reported to be willing to go as high as 42 percent.
The big question faced by the governor and legislators is how much is enough. We can be rather positive that lowering the rebate from 25 percent to 15 percent will lose some business.
But is even 15 percent a good deal for the state? Some studies say it isn't. Some states in even worse financial shape than New Mexico have dropped their rates or suspended their programs.
Why is it so hard to determine what is a good deal and what isn't? It's because the movie and television industry is so different from other businesses. It's a comparison between apples and oranges.
Most businesses come to town, put down stakes, hire permanent employees and pay taxes on their business profits. With film makers, it's hello and goodbye. And if we take out some of the sweetener, it's not even hello.
We know the film industry hires several thousand temporary workers, rents a great deal of equipment, buys a lot of supplies and fills up motels and restaurants. We give the companies back 25 percent of what they document they've spent.
That means they've put 75 percent, three times as much, into the state's economy we wouldn't have had otherwise. It helps the economy. But do the taxes these companies pay the state help or hurt our deficit situation?
We don't seem to know. What if discouraging Hollywood makes our deficit worse? My wife once had a commission job in which she sold much more than expected. She was told the budget item for commissions had run out. What do you think happened next?
The state must get better information. But not all the information seems to be available because of taxpayer confidentiality. Gov. Martinez doesn't agree the state should withhold the information so maybe we'll find out more. We need a definitive study.
Until then, Gov. Martinez says the money will come out of school budgets. The other side says New Mexico is closer than any other state to having a film industry big enough to be full time like Hollywood. Do we toss that chance away?
Officials from top Hollywood studios have recently visited quietly with Gov. Martinez in Santa Fe to explain the situation as they see it. There's no word yet on how that turned out.
Possibly a more serious problem is the money borrowed at no interest by film companies from the state's permanent fund. Wouldn't you think the state should receive at least a prime interest rate?
MON, 2-7-11

JAY MILLER, 3 La Tusa, Santa Fe, NM 87505
(ph) 982-2723, (fax) 984-0982, (e-mail)



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