Film industry wins fight to keep incentives

By Robert Not: The New Mexican

The sponsor of a legislative effort to kill the state’s popular film-production incentives said Tuesday his bill is dead.

Rep. Dennis Kintigh, R-Roswell, acknowledged defeat after film industry supporters passionately argued that the movie business is their economic life blood.

HB725 would repeal the 25 percent tax credit and limit the amount of money available for zero-percent loans to qualifying companies who make films in New Mexico.

Kintigh argued during a House Business and Industry Committee session that in tough economic times such incentives amount to “subsidizing” the industry.

Drawing attention to two recent studies of the financial benefits of such incentives — signed into law in 2003 by former Gov. Gary Johnson and later increased by Gov. Bill Richardson — Kintigh said that by 2010 the incentives would cost the state $54 million.

“Who pays for that?” he asked the committee. “And is it fair?”

The first study, released last August by the Arrowhead Center, the economic arm of New Mexico State University in Las Cruces, said that the rebate was netting state government 14.5 cents for every dollar. The Legislative Finance Committee commissioned that study after lawmakers raised concerns that the tax rebate wasn’t truly benefiting the state.

In January, the New Mexico State Film Office and State Investment Council released a study by the accounting firm of Ernst & Young that stated that state and local government revenues amounted to $1.50 for every dollar the state spends on the program.

Kintigh, in turn, introduced a third study, released by the LFC this week, that compared the first two studies and suggested the Ernst & Young study “overstated the case for the fiscal impact of the film production tax credit.” He also called legislators’ attention to recent economic studies from California and Louisiana suggesting that the film business isn’t necessarily paying off.

But committee members were not moved, particularly after a room full of industry supporters — including union personnel, hotel managers, service industry employees and educators — spoke out against the bill.

“I’ve gone from hauling wood to Hollywood,” one supporter said. Another said that killing the incentives would “unemploy New Mexicans.”

In response, Kintigh told the crowd, “We have created an intoxication, an addiction… but we can’t afford it.”

While it was clear that Kintigh had done his homework in examining the various studies — which, if nothing else, continue to keep alive the question of the economic value of the industry — it was also evident that he had not met with film industry players to discuss his proposal in advance.

Rep. Debbie Rodella, D-Espanola, who chairs the committee, asked Kintigh if he was open to compromise, then asked him to move to an adjoining chamber to discuss a “middle ground” with interested parties.

There, about 25 supporters, including New Mexico Film Office director Lisa Strout and Jon Hendry, business agent for IATSE 480, the local union for New Mexico film technicians, voiced their concerns to Kintigh.

Hendry said even if Kintigh succeeded, all the state would gain from dropping incentives is a one-time savings of about $60 million. In turn, the loss of incentives and movie projects would put close to 10,000 people out of work, close a number of businesses and cause the state to lose out on a long-term investment.

“If we are wrong by 50 cents (on the return on the dollar), we still break even,” Hendry argued.

After an hour of hearing such arguments, Kintigh acknowledged his bill didn’t have much of a chance.

Still, Kintigh told the assemblage he would argue for it again on Thursday. “I believe in it, and I respect that you don’t,” he said. “I won’t withdraw it because I think it’s the right thing to do. I know that I’m going to get run over by this locomotive.”

Contact Robert Nott at 986-3021 or rnott@sfnewmexican.com