Dear Friends of Film,
Please find yesterday's article in the New Mexican below. We are at an impasse on the House side budget proposal and it's pretty much come down to the film industry versus all the Governor's other priorities. As Trip Jennings points out this is a little absurd when you're talking about a budget of over $530,000 million. The Governor is using single entry bookkeeping and giving us zero credit for any revenue we raise for the State. There is also no calculation as to the cost of thousands of new unemployed, further depressing the housing market, and destroying job prospects for NM students.
Please contact members of both sides in the House, especially your local legislators. The message should be simple and clear: "We didn't create the budget crisis, we'll sacrifice but please don't kill our job prospects." Perhaps we could consider a slight reduction in the $400 million annual oil and gas industry subsidy. WE DO NOT HAVE TO CUT EDUCATION TO KEEP THE FILM TAX CREDIT! Gov. Martinez is disingenuous in polarizing the issue in this way. After reading the article, I say to myself "We wants jobs, not prisons!" Maintaining the prison budget simply cannot be as important as job stimulus, which is exactly what the film production tax credit is, fair and simple. The average state tax credit is currently around 26%; reducing ours to 15% will effectively eliminate NM from the national market.
We are in this fight for the long haul, please encourage your co-workers, friends and family to contact often very responsive House of Representatives in support of our jobs and the revenue generated by the industry. This is NOT education vs. Hollywood. It is govt subsidy for JOBS in Film & Television vs. govt subsidy for Oil & Gas Corporations. Tax credit for film & television: $65 million annually. Tax credit for oil & gas: $400 million annually.
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Film fight holds up budget
At stake is $25 million, which would restore funding Martinez demands for schools, Medicaid and prisons
Trip Jennings | The New Mexican (Reposted)
Posted: Tuesday, February 22, 2011 - 2/23/11
A flashpoint for most of this legislative session, New Mexico's film-production tax-credit program found itself in familiar territory Tuesday: at the center of state budget negotiations.
The program emerged as the linchpin in Tuesday's budget standoff between Gov. Susana Martinez and legislative leaders that delayed the passage by the House of Representatives of a proposed $5.4 billion budget.
For more than a month, Martinez has repeatedly demanded the Legislature lower to 15 percent from 25 percent the refund the state gives to qualifying TV and film productions. The $25 million in estimated savings from doing that could be applied toward closing a budget shortfall for next year estimated between $200 million and $450 million, she has said.
But the budget proposal before House lawmakers Tuesday didn't include the reduction, or the savings that would have been generated by it, causing Martinez to criticize the budget proposal as protecting "Hollywood" while shortchanging New Mexico's prisons, public education and Medicaid, the government's low-income health-insurance program.
"Those cuts are too deep, and leaving the film subsidy alone, not good enough," Martinez told The New Mexican outside her fourth-floor Capitol office.
Hours earlier, she had said much the same to legislative leaders.
House Speaker Ben Luján, D-Nambé, and Republican and Democratic legislative leaders from that legislative chamber had gathered in Martinez's office for a behind-closed-doors chat. There, the first-term Republican chief executive had told the lawmakers she wanted the reduction - end of story.
"She was adamant," said Rep. Henry "Kiki" Saavedra, D-Albuquerque, chairman of the House's budget-writing committee. "The budget has come down to the film industry."
In reality, the money Martinez and legislative leaders are arguing over represents a fraction of the proposed $5.4 billion in spending for the year that starts July 1. And while Martinez and the lawmakers spoke fervently about what they wanted or didn't want to see in the budget, crafting a budget involves many uncertainties. That includes any changes the state Senate might make once the House passes it and sends it to that chamber or whether projected tax revenues, which form the foundation for any budget proposal, meet projections, fall short or come in stronger than expected.
The legislative budget proposal at the center of Tuesday's drama was crafted by the House Appropriations and Finance Committee and recommends cutting state spending about 3 percent next year, or nearly $180 million.
But how it goes about achieving those savings is what sparked Martinez's objections.
The legislative proposal recommends spending more than $2 billion on public schools and other education programs, or a few million dollars less than Martinez had recommended in her own budget.
Meanwhile, the legislative proposal recommended $860 million for Medicaid, about $7 million less than Martinez had wanted.
The committee budget also recommended less for the state Corrections Department - nearly $5 million less - than what Martinez has said is necessary to keep from having to close some prisons or releasing some prisoners early.
The $25 million reaped from lowering the film-production tax credit would restore money to those programs at levels Martinez favors.
"We can't slice away health care so deep that we aren't providing the bare essentials that are necessary," Martinez said. "And we can't keep cutting into education and leaving Hollywood by itself."
Martinez's line in the sand sent film-industry representatives scrambling Tuesday to figure out a possible compromise that would keep the film-production tax-credit program whole while delivering the $25 million to the state.
Numerous film-industry veterans have said if the state trims the film-production tax credit, New Mexico would lose future TV and film productions to states with larger tax credits.
One possible alternative mentioned Tuesday to lowering of the tax credit was capping how much New Mexico pays out each year through the program. In the budget year that ended June 30, 2010, the 25 percent New Mexico paid out in qualified expenses for certain productions amounted to $65.9 million.
Rep. Luciano "Lucky" Varela, D-Santa Fe, and chairman of the Legislative Finance Committee, mentioned the cap as a possible element in a potential compromise.
"If for whatever reason if we arrive at a compromise, I don't think that we are all on board by reducing in terms of reducing the credit by $25 million," Varela said.
As a lawmaker from Santa Fe, where 60 film and TV productions have worked in recent years, which is second only to Albuquerque's nearly 100 productions, Varela is aware of the industry's influence. He said state lawmakers must consider the potential consequences if they reduce the program.
"It's a very mobile industry," Varela said. "They can move out of the state of New Mexico."
But House Minority Leader Thomas Taylor, R-Farmington, who also sat in on Tuesday's meeting with the governor, said the state has run out of options. The legislative budget proposal asks state employees and teachers to pay more into their retirement and also sweeps unused dollars from state accounts.
"Pretty much, we have taken money from everything else to try and balance this thing," Taylor said. "It's pivotal," he said of the film-production tax credit. Contact Trip Jennings at 986-3050 or at tjennings@sfnewmexican.com.
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