New Mexico’s legislature has passed a proposal to cap film tax incentives, putting a $50 million limit on annual rebates and setting up a potential showdown with the state’s new governor over the program.
Gov. Susana Martinez had originally wanted a $45 million cap, and insiders tell Variety that the $5 million difference may be enough to prevent her signature. She has 20 days to sign the bill into law.
New Mexico’s rebate will remain at 25%, meanwhile. Martinez had originally wanted to reduce it to 15%, but reducing the annual cap makes the state more competitive with other rebate programs around the country.
An annual cap will allow productions to compete on a first-come, first-served basis as opposed to reducing their total percentage of rebate money. New legislation would take effect July 1.
On Wednesday afternoon, the senate approved a preliminary version of the bill, which was approved by the House late in the evening.
With no annual dollar amount cap on the incentive program, New Mexico gave out $65.9 million in incentives to 22 projects last year. There are currently nine major film and television productions shooting in the state.
Projects granted $2 million in credits or under “shall be paid immediately upon authorization for payment of the credit claim,” according to the bill. Credits between $2 and $5 million will take one year to be paid off fully, while $5 million and more in credits will take three years.