For years, Arizona has watched with envy as New Mexico developed a thriving film economy thanks to a generous tax break.

So now the state is getting in on the action.

Gov. Doug Ducey, a Republican, is expected to sign a bill this week creating a refundable tax credit equal to 15-20 percent of production expenses. The credit will have annual cap rising from $75 million to $125 million over three years.

“This is a good thing for Arizona,” said Jennifer Londgon, a Democratic state representative from Phoenix. “We’re tired of all of this creative talent driving through Arizona to get to New Mexico.”

Across the state, industry stakeholders have been pushing lawmakers for years to create a film incentive to compete with other states. New Mexico was among the first states to introduce a credit in 2003, and has used it to lure TV shows like “Breaking Bad” and “Better Call Saul.” The state recently doubled its cap to $110 million per year.

Rep. Justin Wilmeth, a Republican from Phoenix, argued during a floor debate that the state has been losing out to “other states that are uglier and less cool than Arizona.” In an interview, he said the credit will help showcase his state’s natural amenities to the world.

“I think this is the worst-case scenario for New Mexico, and you can quote me on that,” Wilmeth said.

Arizona has a rich history of filmmaking, including Westerns like “Winchester ’73,” “Gunfight at the OK Corral” and, more recently, “Tombstone.” But as tax credits have become an overriding factor in location decisions in the last 20 years, the state has lost out, said Mark Sankey, spokesman for the Mescal Movie Set, near Tucson.

“They leave California and either drive through or fly over Arizona to got to Texas or New Mexico or to other states,” Sankey said. “It’s been tough getting through the front door when the state you’re working in doesn’t have a tax incentive.”

Arizona had a modest film credit from 2005 to 2010, but it was allowed to expire after the state’s Department of Commerce reported the program cost taxpayers $6.3 million on net in 2008. Supporters of the new credit have stressed that productions will have to spend money in the state before they qualify for a tax rebate.

“We’re not looking to lose money,” said state Sen. David Gowan, a Republican, who sponsored the bill. “We want our taxpayers to benefit from the industry coming here.”

The Mescal Movie Set dates from the late 1960s, and includes 27 buildings comprising a historic Western town. With little filming in the state, the facility is now used mainly for special events and historic tours. The owners are working on refurbishing it, and hope the tax credit will kickstart production. Sankey said they’re already getting calls.

“A lot are asking about the tax credit,” he said. “A lot of people are waiting to see if that went through before they make a commitment.”

Supporters also note that Phoenix and Tucson are just a one-hour flight from Los Angeles, and the state has a crew base and scenery that can accommodate various types of productions. The University of Arizona has a film program, though students typically go elsewhere after graduation.

“We’ve watched a lot of U of A students move on to New York or Los Angeles,” said Peter Catalanotte, director of Film Tucson. “Those students want to come back to Tucson. They want to film here. But the lack of film incentives has been the thing that’s kept them away.”

Meanwhile in the Phoenix area, two investor groups are planning to spend hundreds of millions of dollars to build two separate soundstage facilities. The investments are contingent on the tax credit becoming law.

The credit is designed to favor production on soundstages of at least 10,000 square feet. Some have raised concern that that provision will unduly favor the new facilities, at the expense of smaller locales including Tucson, which does not have a soundstage of that size.

“My concern is the bill was written to benefit Maricopa County and is acing Pima County out of the conversation,” said Steve Kozachik, a Tucson councilman.

He said he would support using city funds to help build a new soundstage that meets the requirements of the credit.

Productions will be able to qualify for the credit if they do outdoor location shoots at places like Mescal or Old Tucson — another historic Western set — but only if they also do all their pre-production and post-production work in Arizona.

Rep. Pamela Powers Hannley, a Democrat from Tucson, voted against the credit. In an interview, she said it was tilted toward Maricopa County, and that the benefits would mostly go to big corporations and out-of-state workers.

“I’m a curmudgeon when it comes to corporate welfare,” she said.

When the bill came to a floor vote on June 23, several conservatives also expressed concern about giving away money to “woke Hollywood.”

“We don’t need another carve-out for specific industries to attract woke Hollywood actors and studios to our state,” said Rep. Shawnna Bolick, a Republican from Phoenix.

Other argued that the film workers who will come to the state will be blue-collar Trump supporters who are eager to flee California.

“They’re ready to punch out, come to Arizona, set up shop, and move that entire industry out of California,” said Rep. Mark Finchem, a Republican from Oro Valley. “They are abused in taxation. They are abused in social media. They are abused in every way of their life. They want out.”

Rep. Teresa Martinez, a Republican from Casa Grande, argued that it would was worth bringing Hollywood to boost the state’s economy.

“I don’t like woke Hollywood,” she said. “I don’t like their ideals. I don’t like their ideology. What I do like — I like jobs. I like people coming to Arizona and spending money in Arizona.”

Some conservatives also argued that the tax credit violates the state constitution because it represents a gift of public funds to private businesses. However, the state has offered generous tax credits for semiconductor plants and data centers.

With a $5 billion surplus, the state is now in a position where it can afford to offer additional credits for filming to diversify its economy.

“It’s a whole industry that does not exist in Arizona in any meaningful way,” said Nick Simonetta, a lobbyist who represents the investors behind a soundstage project in Buckeye. “We thought this is important to put this arrow in the Arizona economic development quiver. It is an industry that produces tremendous economic value.”

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