I received the following information from the Heartland Institute, a Chicago-based free market think tank that works nationally. The data are coming in on film incentives in the various states and, not surprisingly, it is negative in terms of economic activity generated by states giving taxpayer dollars and interest-free loans to film production companies.

Despite massive budget deficits and threats to cut essential programs, states across the nation are continuing to extend subsidies to the film industry through refundable tax credits and sales tax exemptions. At least 44 states currently offer some form of film subsidy, some subsidizing upwards of 30 to 40 percent of a movie’s production costs.

These flashy attempts to bring Hollywood to legislators’ home states have consistently failed to create long-term economic growth and bring in permanent jobs.

According to Greg Albrecht, chief economist for Louisiana’s Legislative Fiscal Office, even the most “successful” film subsidy programs bring little value. In Louisiana, he found, “Even if 100 percent of the reported production budget amounts were being spent purchasing goods and services from Louisiana suppliers, the economic benefits would not be sufficient to provide tax receipts approaching a level necessary to offset the costs of the tax credits.”

Doling out taxpayer dollars to filmmakers is no substitute for sound fiscal policy. States should avoid manipulating the tax code to favor the movie industry, or any other industry, over existing businesses. Such “economic development” schemes–film tax credits, state-owned golf courses, publicly financed stadiums, and the like–are nothing more than pork projects.

Instead of pushing an increasingly inefficient film subsidy “arms race,” state governments should look to boost their economies the old-fashioned way: by reining in government spending and creating a tax code that is low, non-distorting, and broad-based.

The documents cited below provide further information on the economic impact of film subsidy programs.

States’ Film Production Incentives Cause Jitters

The New York Times reports on the expansion of film tax subsidies and how much they are costing taxpayers. Among other examples, the article notes Louisiana taxpayers were put on the hook for $27 million for the Brad Pitt film, The Curious Case of Benjamin Button.

Movie Production Incentives: Blockbuster Support for Lackluster Policy
http://www.taxfoundation.org/publications/show/25706.html
Will Luther of the Tax Foundation says film tax incentives are corporate welfare that creates a subsidy bidding war among states.

Tax Credits for the Motion Picture Industry
http://www.budgetandtax-news.org/article/24182
The Massachusetts Budget and Policy Center outlines how film tax credits work, to whom they are given, how effective they are, and how many jobs they actually bring to Massachusetts.

Roll the Credits … and the Tax Incentives
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1309
Writing for FedGazette, a regional business and economics newspaper published by the Federal Reserve Bank of Minneapolis, Kathy Cobb analyzes the history of film tax credits and considers their effectiveness in producing real economic growth.

Hollywood East? Film Tax Credits in New England
http://www.budgetandtax-news.org/article/24181
Darcy Rollins Saas, a policy analyst for the New England Public Policy Center at the Federal Reserve Bank of Boston, examines the effect film tax credits have had in the Northeast. She finds, “revenue losses are exacerbated by the tendency of these tax credits, like almost all tax credits, to subsidize activity not originally targeted and to provide more incentive than needed to induce the desired response.”

Special Effects: Flawed Report on Film Incentive Provides Distorted Lens
http://www.budgetandtax-news.org/article/28093
Michael D. LaFaive, director of the Mackinac Center’s Morey Fiscal Policy Initiative, analyzes the state’s film incentives program and finds it has failed to produce the lofty economic results some have claimed for it.

Reviews for State’s Film Tax Credit Aren’t Good
http://www.projo.com/news/content/FILM_TAX_CREDIT_08-12-08_ALB5IV1_v12.412297f.html
The Providence Journal finds Hollywood is the real winner when states implement film tax credits. The story cites a report by the Rhode Island Department of Revenue which found, “The state gets back 28 cents for every dollar it gives up to the production companies.”

Indiana Film Incentives Fail to Attract Filmmakers So Far
http://www.indy.com/posts/10770
Indiana, where the legislature approved less-extravagant film subsidies compared with those in other states, has not seen an influx of movie production.

In case you missed it, the Rio Grande Foundation made quite a splash with our recent events on K-12 education reform with Dr. Matthew Ladner. This resulted in an editorial and a front-page story indicating that gubernatorial Susana Martinez had adapted much of the Florida model as her platform.

Ladner’s presentation is available here:

His powerpoint presentation can be found here. Ladner also sat down with the folks at KUNM for an interview which can be found here.

I like the way Mayor Berry is thinking about recycling. The mayor recently outlined a plan to work with private investors to construct a new $5 to $10 million recycling plant. This would hopefully boost the paltry 6% of the city’s “waste stream” that is now recycled.

While I am skeptical about the net positive impact of recycling, I am indeed a regular recycler as I take my cans, bottles, and papers to the local drop off centers around town. Given the conditions of these bins and the fact that they are regularly full, not to mention the issues the city has with recycling glass, I’m convinced the City could do better. That is where Mayor Berry comes in.

A new recycling facility would help the City expand its recycling efforts, and, by relying on the private sector, this could be done without additional expense to taxpayers. A win-win, right? Well, not if you are in organized labor.

The local AFSCME rep has concerns. He claims “We can run a facility like this inhouse that will be the most cost effective.” Really? Where were the proposals from organized labor before? Sure, the City should be open to serious proposals from organized labor as to how we can dramatically upgrade our recycling program at no cost to taxpayers. The thing is, it sounds like a new processing center is necessary and unless private funds are brought to bear, this center won’t happen.

AFSCME is the single largest contributor to political campaigns in the US, having donated more than US$38 million since 1990. Thus, they are sitting on a lot of money that they typically use to support their preferred big-government candidates. Perhaps $10 million of that could be invested in this center? I don’t know, but I think the answer here is to leverage private investment for public (taxpayer) benefit.

On Tuesday, voters in Santa Fe will be asked to take on $35 million in new debt — paid by property tax revenues — to fund a variety of projects at the Community College. We at the Rio Grande Foundation typically have our concerns about government debt issuance and bonds and this one is no different.

The biggest issue is that New Mexico is already dramatically over-served in terms of higher education institutions. This is true both in terms of government employment and the sheer number of institutions relative to a state like Arizona.

Lastly, what services does Santa Fe Community College provide that the College of Santa Fe does not? Would it make sense to combine the schools or at least share some resources before going to the taxpayers for more money? Of course, if voters simply vote “yes,” none of these issues will be addressed.

So, it turns out that New Mexico’s Construction Industries Division (CID) is going to scale back its proposed building codes due to industry concerns. No more mandatory sprinklers; no more demanding that if 50 percent of an existing building is remodeled, the entire structure must be upgraded to the new codes.

That’s great, but the CID wants to move forward with a policy that the new state regulations must be 10 percent stricter than new national model codes (whatever that means). Of course, folks from the CID claim that this increased efficiency is all for free because customers will benefit from less energy usage, but I remain unconvinced.

Regardless, it seems to me that the CID has overstepped its bounds by dealing with energy usage and sprinklers in the first place. Building codes should be there to protect the public’s safety from buildings that are dangerous or will fall down, not to mandate the latest environmental regulations or sprinklers.

After all, shouldn’t you be able to build your building and experience savings without some bureaucrat — waiting in the wings with the force of law — telling you how to build? Clearly, a horribly inefficient building will be an energy sink and would not be a popular choice in the market, but shouldn’t building buyers and tenants have that choice? The same applies to sprinklers. If sprinklers are a major benefit, the insurance companies will price policies in such a way as to make it worth our while — much like those anti-theft devices on cars — why do we need the state looking over our shoulders?

I say, get the CID back to making sure basic safety measures are in place. Leave energy efficiency and the deluxe sprinkler systems up to the free market lest they completely kill New Mexico’s building industry.

Governor Richardson and advocates of massive taxpayer subsidies to the film industry just don’t understand basic economics. According to the New Mexico Independent, Richardson is touting a new study on the decline of the film industry in California and its move to other states.

In a press release, Richardson stated “This study illustrates the value of our film initiatives from the point of view of a state that has lost significant numbers of jobs and revenue because of intense competition from places like New Mexico.” This is supposed to be taken as a justification for New Mexico taxpayers picking up the tab for 25% of film production costs and interest-free loans. The problem is that ANY industry would move to New Mexico given such largess. That doesn’t mean that it is a net economic benefit for the state (or taxpayers).

Let me explain it this way. If we give enough money to a particular industry, we will see increased activity in that sector. Where Richardson and his cronies fall down in their analysis is in assuming that the $60+ million for the fiscal year that just ended would not have resulted in even more jobs and wealth creation than the film subsidies. Richardson naturally assumes that he knows best, but as Nobel Prize-winning economist FA Hayek pointed out, central planners always face the problem of inadequate information relative to their counterparts acting in a free market.

Whatever the studies show, it takes a great deal of faith in the forecasting abilities of Bill Richardson to believe that central planning on behalf of the film industry makes economic sense.

Tom Molitor ran for the Legislature in the Republican Primary. He tells me he is done with politics (forever) and is now doing some writing for the Rio Grande Foundation. He is quite articulate and I am pleased to have him out there putting forth the ideas of individual liberty and limited government. In today’s Albuquerque Journal, Tom explains why Mayor Berry is on the side of the angels in his ongoing battle with the public-sector unions.

Read more of Tom’s recent writings and blogs over at Tom’s page at NewMexicoLiberty.com.

With Mayor Berry spending political capitol in order to spend no more money than the City of Albuquerque can actually afford to pay its employees (an effort we at RGF strongly support), one might think that the City is in for a few years of necessary fiscal restraint. Well, you might be right, but you might be wrong too.

The question of fiscal restraint in the Berry Administration likely hinges on the issue of the downtown events center. As I write in this week’s Alibi, Mayor Berry should abandon the events center/arena project based on the simple fact that it represents an expensive entry into a declining convention center marketplace that a businessman like Berry would never invest his own money in. If you are as concerned as I am, drop the Mayor a line.

According to Rob Nikolewski over at Capitol Report New Mexico, Governor Richardson’s budget secretaries appeared before the Legislative Finance Council (LFC) this morning and announced that their estimate for recurring revenue for the fiscal year just completed (2010) is down by $32.5 million and off by $159.3 million for fiscal year 2011. The most interesting part of the interview is where Senate Finance Committee Chair John Arthur Smith calls out the Richardson Administration for looking at the revenue through “rose colored glasses.”

It looks like more (needed) belt-tightening is on the way for state government as (I hope) there is no appetite among legislators for tax hikes in an election year. If legislators want to get serious about solving the budget problem without raising taxes, they need look no further than here.

As Heath Haussamen reports:

Attorney General Gary King is still considering whether to take his fight to force two nonprofits to register as political committees to the U.S. Supreme Court. He’s also exploring ideas for amending state law so that its requirement that groups disclose funding sources passes the constitutional test.

The two non-profits are left-wing organizations King wants to register are left-wing groups New Mexico Youth Organized, which is a project of the Center for Civic Policy (CCP), and SouthWest Organizing Project maintain that mailers like this one sent out two to three months before the 2008. I am not going to say whether the activities of these two organizations strays over the legal line or not, you’ll have to decide that yourself, but what I will say is that the Rio Grande Foundation has never come close to the lines these organizations have so clearly pushed.

Nonetheless, as Haussamen notes, King seems to believe that the Rio Grande Foundation should be a target of donor disclosure as well. That seems absurd and King has failed to gain traction in the courts, but it would seem that King sees our Watchdog activities as more of a threat than he does government corruption.

Our Capitol Reporter, Rob Nikolewski, has uncovered a disturbing and highly-questionable use of taxpayer dollars — the naming of public buildings after sitting legislators. He uncovered two such buildings, the “Sheryl M. Williams Stapleton African American Performing Arts Center and Exhibit Hall” and the school gymnasium at Pojoaque which is named after House Speaker Ben Lujan.

Of course, this isn’t all, visitors to the UNM Children’s Hospital may notice that there is a pavilion at the medical center named after Richardson and his wife, Barbara. It is unseemly for sitting elected officials to name buildings (or any other public works) after themselves. This has not previously been done in New Mexico, but under Richardson the attitude has been more permissive. Perhaps some legislators might consider changing the law to prohibit this practice?

Of course, as most New Mexicans know, the issue is also pervasive at the federal level with several buildings named after Pete Domenici throughout the state. That said, New Mexicans really only have control of how our own tax dollars are used. Can’t we stop politicians from naming buildings after themselves?

In case you missed it, Dr. Matthew Ladner, our speaker at upcoming events in Albuquerque, Las Cruces, and Santa Fe, and author of our recent policy paper “Florida’s K-12 Lesson for New Mexico,” had an opinion piece in the Albuquerque Journal on Sunday.

As Ladner points out, demography is not destiny when it comes to K-12 education. Children of all racial and ethnic groups — not to mention income levels — can learn given the right reforms.

Various unions seem to be hell-bent on ruining Albuquerque’s day. First, there was this enlightening story on KOB TV last night which clearly showed the harm that can occur when fat government employee pensions are calculated based on earnings from the final three years of employment.

Because the very modest cuts the city is trying to implement would be averaged into his pension, he is retiring. The retirement of one fire fighter is not like to inflict harm on the citizens of Albuquerque, but this contract is way to generous. Only 21 years of work and his pension is already locked in and generous enough that it makes sense for him to retire — in a very tough job market — and take his pension. Something has got to change.

Then there is the out-of-town carpenters union protest that landed on the front page of today’s Albuquerque Journal. First and foremost, protesting a church is pretty low in and of itself. After all, churches are not normally high-dollar entities like the carpenters union that can afford $20 million to build a new training center. But now the union protesters are, according to the article, using “loud, dirty language” within earshot of children attending school at the church and are disrupting mass.

While the carpenters union protesters have a Constitutional right to free speech, I see them as little better than the scumbags at the Westboro Baptist “Church” that protests military funerals.

Funny how sports and politics mix so often (and have done so recently to a greater extent than usual). First there was Lebron James fleeing high tax Ohio for the zero income tax Florida (saving himself $25 million).

Now, as it turns out, Yankees’ boss George Steinbrenner — not one of my favorites I might add — dies in 2010 which just so happens to be the only year for which the death tax is completely repealed. This stroke of luck (or genius, because with him you never know) will save his heirs as much as $500 million in estate taxes.

Hey, you might say, the government needs that $500 million. After all, we face trillion dollar deficits. In a just world Steinbrenner’s estate should be taxed to the hilt. Well, I politely disagree. How much economic wealth do the Yankees, the most valuable franchise in sports, generate? That is a lot of taxes too. Do we want the Yankees to be sold off for the simple necessity of paying a massive tax bill as happened with the Washington Redskins?

Certainly, I disagree with the massive taxpayer subsidy of Yankee stadium, but overall I think Steinbrenner earned his money fair and square, has been taxed on it, and the government should not get another bite of the big apple. That said, I doubt Obama has any interest at all in killing the death tax.

A few days ago I posted about an upcoming Public Regulation Commission hearing on PNM’s requested rate hike that was to take place on Wednesday the 21st. This hearing has been canceled. No word yet on when it will be re-scheduled, but I received the word on this directly from Commissioner Jason Marks.

Rarely does anything surprise me in the newspaper these days. I do have to say that this article expounding on the benefits of the “Cuban model” was pretty surprising. What made it even more shocking was the fact that the author is a professor in the College of Education at Eastern New Mexico University (based in Portales). If communists like this guy are hanging out in Portales, I can only imagine what the education departments in Santa Fe and Taos must be like.

But enough about the author, what about the actual argument that Americans should look to Cuba as a model? First and foremost, it is hard to understand why so many Cubans have escaped their “socialist paradise” and “people first politics and economics” over the years in favor of coming to the United States and other freer nations.

While I know that the author would say that gross domestic product is not a useful measuring stick, it is also useful to note that Cuba’s is ranked 109th in the world. That is not exactly a stellar performance and it is maintained in part by reliance on Venezuelan oil.

I do agree with the author on one thing: the US should end the embargo. But I believe that a flood of US tourists and dollars would be the death knell for the Cuban state as it exists. After all, the embargo is the catch-all excuse that Fidel Castro and his brother have used as an excuse for their nation’s poverty. Taking it away would clearly show that the emperor has no clothes. Besides, free Americans should be able to travel wherever they are welcomed.

The latest Rio Grande Foundation article from the Las Cruces Sun-News details the rising gross receipts tax both in Cruces and around the state and details the many harms that result from this seemingly ever-rising tax.

A chart detailing the rising GRT in Las Cruces can be found here.

Next Wednesday (the 21st of July), the PRC will be meeting to discuss the PNM rate hike. Here is a summary of the issue from PNM, what is causing the rate increases, and how it will impact various groups.

I have written about the potential negative impact of New Mexico’s renewable mandates. That being said, as PRC Commissioner Jason Marks points out, this particular rate increase is not directly related to New Mexico’s renewable mandates per se, so this is an issue to bring up at future rate increase hearings that the PRC will inevitably need to hold, not this one. Anyway, I plan to attend at least a portion of the meeting, but no one picked up my call to the PRC’s number: (505) 827-6941 this morning to find out more details (which I’ll post in a comment to this email).

Check this excellent article from Kate Nash of the Santa Fe New Mexican out. In it, she explains that:

Riders took 45,207 fewer one-way trips on the Rail Runner Express in the second quarter of this year compared to April, May and June of last year, new figures show.

The second-quarter numbers are the first true comparison of riders during a time in which free rides were not offered.

Sprinkled throughout the article are several choice quotes from yours truly as well on the reasons for the decline and the importance of the new numbers.

The federal government does so much to waste our money. One under-appreciated way of doing this is by providing matching funds to help local governments build unnecessary projects like trains and transit. Check out this Reason article about the current push for a streetcar project in Cincinnati.

Oh, and then there was this article in the papers recently about how the federal government is spending $6.7 million to create another Rail Runner station (and transit center) at Montaño Road. Oh, and don’t forget the $5 million (of a total of $7.5 million) the feds put down to fund construction of the bike bridge over the Rio Grande at I-40.

Surely there are better uses for this money with the economy facing major hurdles, the federal government swimming in debt, and the state facing additional, major cutbacks in the coming year?

If you follow transportation and land use planning and enjoyed what Randal O’Toole had to say when he came to Albuquerque, you will definitely want to consider attending the American Dream Conference which is being held in Orlando in September. More information on that event is available here.

I have been doing weekly, minute-long commentaries on relevant issues on a weekly basis on AM 1550 KIVA. Tune in and be sure to listen to those commentaries which are also available on our newly-redesigned website.

Sen. Fischmann had a very nice opinion piece in today’s Albuquerque Journal on the need for K-12 education reform. While he did not go as far as I’d have liked in terms of promoting school choice, the primary thrust of the article is the elimination of social promotion, which is straight out of the Florida-style reforms being advocated by Dr. Matthew Ladner who has written this paper and will be speaking about the topic at a series of events around the state at the end of July. More information on that here.

The fact is that we need to come up with innovative, cost-effective solutions to our education woes and we needed to do this yesterday. I applaud Sen. Fischmann for keeping the discussion going and being willing to speak out.

New Jersey’s Governor Chris Christie is unveiling plans to save that fiscally troubled state $210 annually by privatizing such current state operations as motor vehicle inspections, state parks and turnpike toll booths.  We’re looking at closing state parks to save money.  Why not let an entrepreneur show what he/she can do to keep a park open, create some jobs and maybe turn a buck or two of profit?  Golf courses–same idea.  Garbage collection, street cleaning, servicing public vehicle fleets–if Jersey can do it with their morass of union connections and entrenched bureaucrats, a smaller state like New Mexico should at least be able to try some test privatization to see if it works better.