By Sheila Seclearr
It astonished me that a newly aligned New Mexico government pounced immediately ~ first week in office ~ on the film industry, one of the state's growth industries. Looks like that's largely due to the self-proclaimed "crusade" of state representative Dennis Kintigh. After this week's debate in Albuquerque, Alton Walpole made public his brillliant letter to Rep. Kintigh. I suggest we flood Kintigh's office with similar letters and phone calls. Kintigh can be reached at:
askdennis@denniskintigh.com or Capital phone: 505-986-4453
Basically, raising the costs of doing business now in New Mexico equals jobs lost, in film, in tourism and in businesses across the state, and that's the opposite of what these politicians promised in order to to get themselves voted into office.
Hold them accountable.
Representative Dennis J. Kintigh,
Thank you for taking part in the New Mexico Film Tax Incentive Debate.
From your opening remarks your assessment of the film incentive program in New Mexico was that it is "bad economic policy" and that you have been "on a crusade for years" to end the program.
During the debate you noted the following:
1. The accounting procedure is "shrouded in secrecy".
2. The NM film rebate should be eliminated because the estimated amount of the rebate is "not adequately projected" each year.
3. It is "time to re-evaluate" the program.
4. The film industry is a "privileged" industry.
5. The LFC has been presented with a Tax Expenditure Budget.
6. Working in the film industry is an addiction, like being "hooked on heroin".
7. The definition of a successful program is when "it is no longer subsidized".
8. There is "abuse" in the film rebate program (especially residency).
9. You propose to "build roads" rather than make films.
10. Do not spread tax credits like "tinker dust".
11. It is the only industry with "favorable status".
I would offer the following:
A. The accounting procedures are not clouded in secrecy. Actual production company procedures for accounting are extremely detailed, precise and diligent. All projected expenditures are fully and carefully examined with Purchase Orders and multiple approvals before payment. Upon completion of any specific production and prior to any rebate the accounting records are thoroughly audited and examined by New Mexico Taxation and Revenue. The process is as transparent as state law allows. The NM Film Office has gone a step further by "breaking" down the aggregate expenditure in to categories (labor, rental, etc). If you are having difficulty in accessing these records I suggest that you log on the nmfilm.com site and examine the category expenditure records of production companies. If you are having difficulty in getting expenditure records from NM Taxation and Revenue, please contact me. I will be glad to obtain these records for you from New Mexico Tax & Revenue and deliver them to you. It is important that you have precise data in order to make intelligent decisions.
B. I agree that the program should be examined and re-evaluated. I think that you will find it is one of the best economic incentive programs currently in existence in the State of New Mexico. It has created jobs, careers, additional taxes and substantial revenue from outside of the state. With regard to your claim of "abuse", it is true that the original residency requirement was less than perfect. Perhaps you are unaware that in the past year the residency requirements have been better defined and modified to insure precise accuracy. No one can be a resident in multiple locations. In order for any employee to qualify for the rebate, they must sign a residency document and provide proof of residency in New Mexico (no longer just a Driver's License or Post Office Box). Abuse of this qualification results in perjury. I am also glad to forward the form and the qualifications to you if you do not have time or are unable to access this information.
C. The film industry is not a "privileged" industry and not the only industry with "favorable status". I would offer that the oil & gas industry is far more privileged and has a more favorable status that the film industry. I do not wish to demean the oil & gas industry, that along with tourism, has been the "backbone" of New Mexico economy. The film production incentives (originally designed during Republican Governor Gary Johnson's administration) were developed in an attempt to stimulate and support an additional industry in New Mexico and support growth. It is working.
D. I am not certain that "subsidy" is the correct definition of the film incentive program. The rebate program was originally designed to bring income back into the United States (primarily from Canada). Canada offered a rebate, so the United States needed to offer a rebate to compete. It is now a competition between states. I agree with you that the definition of a successful program is a program that "is not subsidized", but in the current economy and competitive marketplace, a rebate is necessary to even compete for revenue. The rebate has been increased to remain in a competitive position. New Mexico's program was well thought out, precisely drafted & defined and has been extremely well managed. It is not the "highest" state rebate available, but it is simple, fair, competitive, relatively easy to navigate and does allow rebates for "out-of-state" goods or services . Unlike oil and gas (which exist in our state) where the extractor and exporter must go to the existing source in New Mexico, film production companies have choices of "where to shoot their film". The rebate amount is the primary factor that attracts film production; if the rebate is diminished, reduced or eliminated, production companies will not select New Mexico as the location where they will spend their money. Capping the rebate amount (per fiscal year or per production) will also destroy the current successful industry. It will alter an option that is currently "certain" to "uncertain" (Do I have to shoot at the beginning of the year? Is my budget too large to consider New Mexico?)
E. Many states have attempted to "copy" the New Mexico program or create their own in order to have a "quick financial gain" for their economy. We, in the film industry, have always projected that many of the other state programs would be abandoned. The state programs that are being eliminated were not properly designed or managed, allowing for extreme abuse and failure. The New Mexico program is the opposite. I thank you and the Legislature for designing and implementing a successful program. Please do not allow New Mexico to follow the path of states that have failed in their foresight, ethics and sound economic principles.
For your information I am a native New Mexican (raised in Torrance County). I work as a Unit Production Manager and Line Producer (I manage other people's money and assist with hiring & location decisions). Because of the film incentive program I am now able to work primarily in my home state. I most recently was the Production Manager on "Crazy Heart" and "The Book of Eli" (and assisted Denzel Washington in making a large donation to the Boy's Club of Roswell). I deeply care about our state, I am concerned with the deficit we currently face (I applaud your efforts to balance our budget....it is a much more difficult job than mine) and I feel that we should respect the Legislative process and make certain that you have all the factual information necessary in order to make the difficult decisions you have to make.
I do not know exactly how to offer "proof" or "data" that supports the proposition that "if the film incentive program is reduced or eliminated, film production in New Mexico will generally not exist". I am glad to assist with gathering information from studio and production finance executives (in the form of letters) to "confirm" or "deny" this premise if you require absolute data. I can assure you that the multiple phone calls I receive daily from these financiers (with the information that a reduction or elimination is even being proposed) has created considerable anxiety. And I am already being informed that New Mexico may no longer be considered.
I understand your opening comments at the debate that you have been on this "crusade" for many years, I offer that being on a crusade may be a form of addiction. I do not agree that the film incentive program is "bad economic policy". My question is why are you on this crusade?
Thank you,
Alton Walpole
FYI: Alton Walpole is the owner of Mountainair Films Inc. in Santa Fe and was both UPM and Line Producer on recent Academy Award winning Crazy Heart ~best actor, Jeff Bridges~ plus professionally crucial to the production of many more New Mexico films. Thank you, Alton!!
