New Mexico Business Weekly - by Megan Kamerick NMBW Staff
Film and television productions such as “In Plain Sight” are a common sight now in downtown Albuquerque. A new association aims to give the industry a stronger voice in the state legislative arena on issues such as incentives.
During the 2008 legislative session, the state’s film incentives got a brief close-up.
The Legislative Finance Committee raised concerns about how quickly the use of the tax rebates had grown. State Sen. John Arthur Smith, D-Deming, proposed capping the rebates at $30 million annually.
The legislation was never fully introduced, Smith said, because the initial support evaporated.
“At the LFC hearings, I was trying to put a cap on [the incentives],” he said. “The next thing I knew, they had me crucifying Christ.”
But even the mention of revisiting the incentives caught the attention of many people working in film and media here.
“That was something the majority of us in this industry had no clue was happening,” said Lynette O’Connor, owner of The O’agency, which represents actors and models.
While it’s not clear if any similar legislation will come up in the 2009 session, there have been rumblings, including a study critical of the state’s rebates versus the actual financial benefit film productions have brought here.
So O’Connor and others formed the Film Industry Promotion Association, or FIPA, and hired The Rutherford Group LLC to lobby state officials.
“We just felt we need a voice, we need someone walking the hallways [of the Roundhouse] to tell us what’s going on, to organize us so we could speak with one voice,” O’Connor said.
The group has about 50 members so far, and many more volunteers. It’s trying to raise $56,000 to pay for its lobbying efforts, she said. FIPA recently held a meeting at the new prop house in Albuquerque, Film Maker Production Services, that drew about 65 attendees, among them actors, various union representatives, real estate managers, small business owners and tourism and hospitality industry people.
Rutherford Group principal Tom Rutherford has begun doing outreach to industries that benefit from the film business, such as hotels, to get broad-based support for the new coalition. He is also floating the idea of hosting legislators at Film Maker Production Services because it showcases how incentives are helping to build a permanent industry here, he said.
“This is an example of a company that used to exist only in California, so it’s making it easier for the industry to come here,” Rutherford said. “I think the bottom-line big challenge is to be able to demonstrate how deep the industry goes in the state, how many times the money turns over.”
The state is facing a $278 million revenue shortfall, according to the LFC’s October estimates, although December estimates could be greater given the decline in oil prices. The amount of the film tax rebates has grown to about $98 million since the incentives were introduced. However, there are no plans to make recommendations regarding film incentive legislation, said David Abbey, LFC director.
That said, the LFC did contract with New Mexico State University’s Arrowhead Center to produce an economic impact study and the results were not encouraging. It found that New Mexico gets about 14.4 cents in tax revenue for every dollar it spends on a tax rebate for film productions. Smith said the rebates have grown much more quickly than state officials anticipated.
“What I’m understanding now is they’re getting tax credits on whiskey and toilet paper,” he said.
Productions can get a 25 percent tax rebate on qualified local expenditures, but the money has to be spent for New Mexico goods and services. There are also wage subsidies available for productions for certain kinds of crew training.
“Our program design is very specific about what qualifies for a rebate,” said Eric Witt, Gov. Bill Richardson’s deputy chief of staff. “It’s specifically tailored to funnel all money back into the state.”
Critics of the Arrowhead study, including Witt, say the methodology was not comprehensive in capturing all the film industry’s economic activity. Its direct spending since 2003 totals $733 million.
“That’s a 7 to 1 return on investment,” he said.
The state uses a multiplier of three to calculate a statewide economic impact of $2.2 billion since 2003.
Richardson’s office hired Ernst & Young for about $50,000 to do what Witt said will be an independent, comprehensive review of the industry’s economic impact on New Mexico. It’s due to be finished just before the legislative session, which starts Jan. 20.
Ernst & Young surveyed people who make at least 51 percent of their salary in film and media, said Lisa Strout, director of the New Mexico Film Office. It also looked at businesses that are doing a great deal of work for the industry, such as lumber yards, concierge services, hotels and rental car companies.
Smith said he does not have plans to reintroduce legislation to cap the incentives, but added he would not be surprised if legislators revive the effort since the state needs revenue.
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