Though rebate remains untouched, political changes affect payback sked
A s a candidate for New Mexico governor, Republican Susana Martinez hinted at her displeasure with the state’s 25% film tax credit program, pledging to ensure “these incentives are truly helping the economy.”
Now that she occupies the state’s top post, will she carry out plans to dramatically alter the credits that have made New Mexico so enchanting to Hollywood?
So far, the answer is inconclusive. As if to stress a break from former Gov. Bill Richardson, Martinez recently enacted changes to the 25% tax credit that had made New Mexico one of the top U.S. destinations for film and TV production (even though the nonpartisan program was signed into law by his predecessor, Republican Gary Johnson). But many New Mexico industryites say the modifications are insignificant.
“Look, the program is exactly the way it was before,” insists Albuquerque Studios CEO Dana Arnold, whose eight stages remain booked with major studio fare like Marvel’s “The Avengers” and the AMC drama “Breaking Bad,” which recently wrapped its fourth season. “The 25% credit is intact. All the (state) treasury is doing is simply allocating what year they are going to pay you in. The difference is you have to wait a little longer to get your money.”
According to the new law, only credits that total less than $2 million will be paid immediately. If a credit is in the $2 million-$5 million range, the payout will be broken into two payments over a 12-month period. If a credit exceeds $5 million, the payout will be divided into three equal payments over two years.
Adding further anxiety is the fact that all credits will now be subject to a $50 million rolling cap. So, while the state is able to accrue unlimited tax credits in any given fiscal year, the treasury will only be able to refund $50 million per fiscal year. Payments on any amounts over $50 million will be deferred until the following fiscal year.
Despite the uncertainty, cameras continue to roll this summer in the state that is known for its pleasant climate and cinematic vistas. Producers Adam Ripp and Rob Paris chose New Mexico for their Cameron Diaz-Colin Firth starrer “Gambit,” despite the fact that the Coen brothers-penned script called for a Texas backdrop.
“Getting back 25% was just too tempting to pass up,” says Paris, who will receive a quarter of all New Mexico-based spending despite 80% of “Gambit” lensing in London. “We are also incredibly happy with the crew base here. It’s very deep. It can support about four major motion pictures at a time.”
But IATSE local head Jon Hendry, who backed Martinez’s gubernatorial opponent Diane Denish, insists that reverberations from the law change can already be felt.
“Fall is not looking great,” says Hendry, while taking a break from the independently financed mystery thriller “Odd Thomas.” “Everyone here is a little worried. People like certainty, and it’s kind of wait and see right now.”
According to Eric Witt, who served as Richardson’s media honcho and now consults for Albuquerque Studios, “We lost three films because of uncertainty and the rhetoric that was going around: ‘Lone Ranger,’ ‘Iron Man 3’ and ‘Oblivion,’ the new Tom Cruise movie.”
“Lone Ranger” was coaxed into coming back, thanks to lobbying efforts by the local industry, and “Iron Man 3” is once again considering New Mexico (after eyeing the U.K. as an alternative), but “Oblivion” is gone for good, and the industry remains cautious amid perceived political animosity from the new administration .
Although New Mexico’s 25% credit remains largely intact, Martinez has called for further cuts to the state’s incentives program (the state’s unique interest-free loan program, for instance, has been replaced by a standard market-rate offering). Still, few believe she will get any additional trims past the state’s Democrat-controlled house and senate given the estimated 8,000-12,000 people employed directly in the state’s film and TV business.
A former district attorney who takes frequent jabs at Hollywood and unions, Martinez has already downsized the state’s film office by cutting its staff in half. Director Lisa Strout ankled in January and has moved on to her native Massachusetts to take the reins of that state’s busy film office. Last month, former New Mexico Independent Power Producers exec director Nick Maniatis was tapped to replace Strout. He says resources and manpower will continue to be devoted to film, but with an eye toward attracting more episodic series, post-production facilities and endeavors related to digital media and the arts.
“My goal for this office is to help create long-term, well-paying jobs for New Mexicans in an industry that can sustain itself for years to come,” Maniatis says.
But Hendry says the film office moves and the six-month vacancy on the director post offer a clue to the governor’s priorities.
“She (was) in no hurry to fill that post,” Hendry says. “I think it’s going to be a long education process for (Martinez) to realize how important we are to this state’s economy.”
For her part, Martinez is remaining tight-lipped about the state’s incentives program. The governor declined to comment for this report.
For his part, Arnold insists the next 12 months look stronger than ever. In fact, Albuquerque Studios has six holds in place for major studio films that are all scheduled to begin lensing in August and September.
“I have yet to have a production call and say, ‘We aren’t coming for this reason,’ ” he says. “We have more holds on our stages (for fall) than we’ve had in eight years. The major productions will still come to New Mexico. We have the crews here, we have the stages, and we have the environment.”
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