Big-Budget Movies

It would be easy to conclude that New Mexico's program of tax incentives for film and TV producers has been a big success. The ...
by | December 31, 2008
 

Money film It would be easy to conclude that New Mexico's program of tax incentives for film and TV producers has been a big success. The state is hosting roughly 10 times as much film production as it did a decade ago. Albuquerque is now home to some of the largest soundstages in the world, and Sony Pictures Imageworks plans to move its special-effects operations to a new location there.

But a look at the numbers suggests that all this new activity has come at considerable cost. During the past fiscal year, according to a recent study, New Mexico granted $38.2 million in tax rebates for TV and movie production, but in return saw only enough increase in economic activity to generate $5.5 million in public revenue. "For every one dollar in rebate," the study concluded, "the state only received 14.44 cents in return."

Over the past five years, all but 10 states and some cities have created film-incentive programs. This has spread production around, but no one has come up with a formula that can be shown to provide a net economic benefit for the state or locality itself.

Some places are still seeking a method that can work. The goal, says Ivan Schwarz, of the Greater Cleveland Film Commission, should not be to land a few movies but to persuade producers to put down roots. Fostering a permanent infrastructure of experienced crews and graphic designers requires patience. "We're trying to build an industry," he says. "It's not just an overnight savior."

The problem is that there's not enough production to support ongoing film work everywhere. And, with most states competing to attract such business, it's going to be doubly hard for many of them to remain viable locations. "States are auctioning off their revenues in order to attract this particular industry," says Michigan state Senator Nancy Cassis. "As soon as one state outbids another, the film producers will be out of there in a nanosecond."

In April, Cassis cast the sole dissenting vote when her state created the nation's most generous incentive package, offering film producers rebates of up to 42 percent of production costs (New Mexico's, by comparison, is 25 percent). She believes her colleagues will come around on the issue as the cost of the program spirals past initial estimates.

Given the grim budget picture in most states, there's talk in many capitals of imposing overall limits on film subsidies. Still, this may be one of those shiny new economic development pursuits that everybody likes too much to worry about mere facts and figures. "I tried to cap it in the $30 million range," says New Mexico state Senator John Arthur Smith, "but I got stampeded on it."

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