Sen. Tim Jennings made front page news this morning with his proposal that cities chip in to pay a portion of the costs for the New Mexico film industry’s subsidies which totaled $65 million last year. From a tax policy perspective, this proposal makes a lot of sense.
Simply put, the state’s General Fund bears the whole price tag of the subsidies currently. According to the Film Office’s own numbers, this program generated $600 million, which, as an aside, when taxed at the 5% state GRT rate or the 4.9% personal income tax rate, generated approximately $30 million in taxes. Thus, the program is a money-loser.
Nonetheless, you may have noticed that I did not include the city portions of the GRT in this calculation. Regardless of how much the film industry actually generates in tax revenue, since local governments pay nothing for the film industry, they are getting a free ride at the moment.
It only makes sense that the cities that benefit from this program, primarily Albuquerque and Santa Fe which have benefited disproportionately from the subsidies. Of course, as the article notes, the financially-strapped cities are not exactly jumping on the bandwagon to support this industry that is supposedly so important to their economies. While I have no knowledge of Jennings’ actual reasoning for this effort, I think that actually asking the various entities — whether they be cities or the industries that benefit from the film program — chip in a significant amount, will show just how deep the support for this program really is.