We’ve been saying for quite some time that New Mexico’s generous incentives to the film industry do not make sense. Yet another study backs us up on this point. A front page article on the incentives appeared in today’s Albuquerque Journal. According to the new study which was undertaken by a policy analyst with the Federal Reserve Bank of Boston, the state of New Mexico earned $0.39 in estimated new revenues per dollar of credit. In other words, we are losing money on the credits because new revenues are lower than expenditures. This information contradicts the now discredited Ernst & Young report issued in January 2009 found that each dollar of incentive generated a total of $1.50 in revenue.
Rather than going through all the ways this new film study discredits the idea that the film program is an economic boon, I’ll simply offer a few quotes from Lisa Strout of the New Mexico Film Office. Not surprisingly, she is quoted in the Journal article as saying “We will stick by Ernst & Young.” Well, duh. No matter how discredited the data, she has a direct financial interest in the film program. She won’t budge.
Better still, however, is Strout’s quote “Ernst & Young were very tough. They said if they could not get the data (to support an analysis) they would leave it out.” This, of course, directly conflicts with the Boston Fed’s reporting that “(The Ernst & Young) Study findings that increased tourism accounts for between 25 percent and 40 percent of the incentives’ economic impact are “difficult, if not impossible” to verify.
So, there you have it. New Mexico policymakers have created a powerful special interest “entitlement” to the tune of $80 million annually that includes a government entity (The Film Office) that lobbies on its behalf. Killing the program is simply politically impossible at this point. Hopefully the Legislature will seriously consider adopting Sen. John Arthur-Smith’s subsidy cap legislation.