Pub. 15 2018 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S Issue 1 • 2018 13 enough funding for the rebates. If the cap has been reached for four consecutive years and, in some instances, productions have had to wait up to a year to receive the rebate. In the fiscal impact report for House Bill 113, interesting financial information is contained. It states that, “The state increment of the gross receipts tax is 5.125 percent; thus, for the state to generate $50 million in gross receipts tax revenues, the film industry would have to generate almost $1 billion of taxable gross receipts. Removing the aggregate cap could reduce general fund revenue dramatically. The current tax credit is funded by the corporate income tax (CIT) program. Last year, CIT collections were approximately $170 million; $100 million was paid out as tax year liabilities: $50 million specifically for film and television production and an - other $50 million in other refunds (other refundable credits as well as overpayment refunds). It is probable that remov - ing the aggregate cap on this credit would result in sharply lower CIT revenues which flow to the general fund.” A large percentage of corporate income tax collection is already al - located to film and television production as is, so removal of the cap would probably not be wise at this juncture. It would be more feasible if New Mexico had a multitude of thriving industries, but that is not the case currently. Even with the cap in place, 2017 was an incredibly success - ful year for the film industry in New Mexico. As mentioned earlier in the article, direct spending into the state economy by the film industry dipped to $162.1 million in fiscal year 2014. But, in 2017, direct spending into the state reached a record $505.9 million. An unprecedented 52 projects with budgets over $1 million took place in the state, up from 18 in 2014. Another important factor is that, due to the concerted effort to develop local businesses to service film productions, the state film industry rarely outsources vendors. Local crews, local insurance, and local vendors are almost exclusively employed by film productions. A key factor in New Mexico’s success is that the state has been friendly to film production for a sustained period of time. When Bill Richardson was Governor, New Mexico was one of the first states that developed a film program. Now, more than 40 states have film incentives, but many of them merely have them on the books and don’t necessarily do much with them. Two of the early adopters, New Mexico and Louisiana, have developed a level of trust with the industry that has allowed the programs to flourish. The success of the film industry in the state has also lead to additional opportunities to attract tourists, including tours of locations used in the television series “Breaking Bad” and “Better Call Saul”. Film and television production has given New Mexico greater exposure, thus leading to more curiosity regarding visiting and living in the state. In an article that appeared last November in Variety , several film crew work - ers who have worked on multiple productions in the state are quoted as saying New Mexico was viewed as a place in the mid - dle of nowhere in the 1980s. Their friends asked them some - thing to the effect of, “What is there to do in New Mexico?” However, many workers in the film industry who had no idea what was in store for them when they came here 30-35 years ago have now moved here. As more members of film crews have moved to the state, there has been a greater emphasis on developing local talent as opposed to bringing in mercenaries from film crews in California. Some of the notable films to shoot fully or partially New Mexico over the years include “The Avengers”, “Butch Cassi - dy and the Sundance Kid”, “City Slickers”, “Contact”, “Crazy Heart”, “Easy Rider”, “Hell or High Water”, “Independence Day”, “Little Miss Sunshine”, “Logan”, “No Country for Old Men”, “Sicario”, “Silverado”, “Terminator 2”, “Thor”, “Traf - fic”, and “Young Guns”. And, obviously, there have been numerous high-profile television programs that have been shot in the state. New Mexico has its share of economic issues, but it’s important to look at film production as an example of an industry that has excelled here. It can be attributed to creating economic incentives, developing a base of local talent, allow - ing the talent to develop over a sustained period of time, and having a centralized office (The New Mexico Film Office) that is competent and committed. New Mexico has a numerous factors that should make it appealing to non-residents, includ - ing the weather and cost of living. There’s no reason that the state can’t attempt to cultivate relationships with other indus - tries the same way it has with film and television production. It may not always work out the same way it has with the film industry, but aggressively pursuing as many opportunities as possible can only be beneficial to the state in the long-run. n