The State of New Mexico would cut back its film production tax credit for a year under a bill endorsed Monday by a House committee — even though film industry representatives said the move could drastically reduce the number of movies and television shows made in New Mexico.
The House Ways and Committee voted along party lines to give a do-pass recommendation to House Bill 15, sponsored by Rep. Rod Montoya, R-Farmington. The measure would cut in half the annual cap for all credits paid to film production companies in the fiscal year that began July 1. The current limit is $50 million.
The incentive program provides a 25 percent rebate to film companies for most in-state expenditures. Since 2013, producers of television series have been allowed to deduct 30 percent of the money they spend in the state.
“All we’re looking to do is to defer payment for one year,” Montoya told the committee.
But Jon Hendry, president of the New Mexico Federation of Labor, said the move would send the film industry a message that “our word is not our bond.”
Bob Barberousse, a lobbyist for the Motion Picture Association of America, said all major studios have called him to ask him about Montoya’s bill. He said the state of Louisiana, which a few years ago was considered one of the best states for film incentives, passed similar legislation. Since then, film production in that state has dwindled, Barberousse said.
Committee chairman Jason Harper, R-Rio Rancho, said he has friends in the film industry. But he said, “I don’t like [tax] incentives.” He said the state should get rid of incentives while lowering tax rates in general, so the revenue base would be broader. “That would make us competitive,” he said.
On Saturday the same committee voted to effectively kill a Senate bill that would have delayed for two years scheduled corporate tax cuts. That vote basically was a reversal of Monday’s vote on the film bill with Democrats in favor of the bill and Republicans against it.
The generous film incentives were passed under the administration of Gov. Bill Richardson. When he was in office there was no cap on the tax credit.
But when Gov. Susana Martinez took office in 2011, she called for reducing the credit to 15 percent, saying the incentive benefited Hollywood at the expense of New Mexico school children. Eventually, Martinez that year compromised with Democrats, keeping the 25 percent credit but imposing the $50 million cap.
In 2013, Martinez signed a measure called the “Breaking Bad Bill” — named for the television series that filmed in Albuquerque for seven years — which raised the deduction for producers of TV series.
Martinez did not take a position on Montoya’s bill.
HB 15 now goes to the House floor.