State Sen. George Muñoz, a Democrat from Gallup and the chairman of the powerful Legislative Finance Committee has raised concerns about New Mexico’s film production incentive program. This initiative has been a subject of scrutiny as questions persist regarding its cost-effectiveness.
Sen. Muñoz has previously questioned the workings of the incentive program, as have other skeptics who wonder if the economic impact of New Mexico’s thriving film industry is truly as substantial as it seems.
In a letter to the New Mexico Film Office, Sen. Muñoz has requested a detailed report on how the film tax credit is calculated, eligibility requirements, and any updates or changes to the criteria. His concern primarily revolves around the unique structure of the program, where dividends are paid out after production companies submit receipts for their costs, unlike traditional tax credit initiatives.
Moreover, Sen. Muñoz has sought an opinion from Attorney General Raúl Torrez on whether the incentive program violates the state’s anti-donation clause, which prohibits government agencies from making donations to private enterprises. If the attorney general’s office determines a violation, it may necessitate a revision of the program.
The film incentive program has long been scrutinized, with a recent Legislative Finance Committee study revealing that it accounts for a significant portion of all state economic development incentives but provides less than 1% of the film industry’s share of private employment. The study questions the cost-effectiveness of the program, citing that it costs the state over $100 million in payouts in fiscal year 2023 but does not attract substantial private investments.
The film industry’s employment figures are also under scrutiny, with the program generating approximately 8,000 jobs per year at a cost of around $22,800 per job created, higher than other job-creation programs.
While New Mexico has become a popular destination for filmmakers due to the incentive program, which offers significant rebates on qualified expenses, the recent questions raised by Sen. Muñoz and the legislative committee study have rekindled doubts about the program’s economic payoff.
Despite these concerns, the program continues to enjoy political support, making it unlikely to change or disappear in the near future. It benefits from strong revenues generated by the oil and gas industry, which contribute to the state’s coffers. If these revenues were to decline significantly, lawmakers might reconsider the program’s incentives and evaluate their value to the state’s economy.