It’s been a busy week for film-related legislation in the New Mexico Legislature.
Sen. Phil Griego, D-San Jose, is pushing to eliminate the $50 million annual cap on production incentives (although so far it does not appear that he has filed a bill). And on Jan. 31, Rep. Antonio “Moe” Maestas, D-Albuquerque, introduced a bill to raise the 25 percent rebate on qualified expenditures to 30 percent for television productions.
His bill, HB 379, would also tweak the existing rules to allow unused credits to roll over if the amount claimed does not reach $50 million in a fiscal year. That was an annual cap put in place several years ago after numerous tussles between the legislature and Gov. Susana Martinez’s administration.
The idea, Maestas said, is to lure more series like “Breaking Bad” and “In Plain Sight,” which industry supporters say provide a reliable stream of work in the state over a number of years. They were also set and filmed in Albuquerque, bringing an extra boost of recognition to the state’s largest city.
Maestas said if it was up to him, he would have done away with the cap, but Martinez is committed to keeping it because she feels it offers more predictability. In the span of just two years, from FY2007 to FY2009, the amount of tax credits paid out soared from $16.6 million to $76.4 million, which alarmed some legislators.
“This doesn’t jeopardize the predictability of the state budget,” Maestas said of his bill.
He added that it’s important to send a message that New Mexico is committed to the film and media industry. He has been working with representatives of those industries on the bill and said the legislation is the result of communication between industry officials and the governor’s office.
“The governor fully supports carrying over unused film incentives from one year to the next,” said Enrique Knell, spokesman for Gov. Martinez, in a prepared statement. “It allows us to maximize use of the fund while providing budget certainty. We haven’t seen the bill yet, and haven’t reviewed the proposal to increase the rebate level to 30 percent.That’s something we will have to look at.”
There has apparently been an assumption by some in state government that unused credits do roll over, but that is not the case. So under HB 379, if only $40 million in incentives are paid out in a given year, the next year will have $60 million available rather than just $50 million, Maestas said.
According to numbers from the state film office, only $9.5 million in credits were paid out in fiscal year 2012, which ended June 30, 2012. That’s compared to $54.7 million paid out in FY2011 and $65.9 paid out in FY2010.
While there has been an uptick in filming activity in New Mexico, the first half of FY2013 saw just $78.7 spent by production companies here. If that pace remains the same, the state would see just about $155 million in local spend by productions for FY2013. That’s compared to $224.6 million spent in all of FY2012 and $276.7 million spent by productions here in FY2011.
Maestas said he wanted to give an extra boost to TV series because they stay longer and thus add more to the state’s economic growth. “In Plain Sight” wrapped its five-year run last year and “Breaking Bad” is shooting its final episodes now.
“TV is more longterm than feature films, which is better for maintaining and training local crew and bringing economic benefit to the area,” said Joseph Chianese, executive vice president with Entertainment Partners, which advises production companies on film and media incentives around the world.
Rick Clemente, CEO of I-25 Studios in Albuquerque, and part of the NMEDIA industry group, said the changes made in the film incentive program in the last few years have hampered the ability to lure TV shows. They need to be able predict costs for five years. The cap and the tiered payout system inject unpredictability into those calculations, he said. The tier system is based on the size of the credit a production is seeking. Those over $2 million are divided into two installments, and those worth $5 million or more are paid out over three installments.
“The unintended consequences of the cap and tiered pay system is that people stopped looking at doing pilots and series here and that’s a tragedy,” said Clemente, whose studio hosted “In Plain Sight.”
Chianese could not say for certain if other states have extra incentives for TV series, but a review of some of the states that compete with New Mexico, such as Georgia, Louisiana, North Carolina, Utah and New York at Entertainment Partners’ website indicates it’s rare, if non-existent, although some states offer extra rebates for shooting in certain areas of a state or using local facilities or studios.
Canada, especially British Columbia, has been highly successful in snagging TV pilots and series from Hollywood. But apparently the rising Canadian dollar is putting a crimp in that trend, according to the Hollywood Reporter. And California tried to derail that trend with a 25 percent credit for “returning” TV series — those that have been filming elsewhere and relocate back. That particular incentive does not include network series or those on pay TV. However, it does include cable series with higher production values, such as “Breaking Bad,” Chianese said. The U.K. recently put new incentives in place in an effort to keep “high-end TV” in-country.
HB 379 will go to just one committee, Taxation and Revenue, Maestas said. If it passes, it will go to a floor vote.