When is $10 million in taxpayer money simply not enough? In the case of the people who already got a sweetheart deal to build Santa Fe Studios, when you can ask for $22 million more.
There is likely no other business in the State of New Mexico that has received as many subsidies as Santa Fe Studios. That hasn’t stopped the Studios have applied for $22 million in industrial revenue bonds to Santa Fe County.
Already, the State has provided $10 million in economic development grants. The County has provided a generous $6.5 million bank loan.
It’s not as if film studios in New Mexico require subsidies. Albuquerque Studios was built without direct taxpayer subsidy. One would think that if Santa Fe Studios’ business was good enough to require expansion, the owners could pay for it themselves like any other business. Unfortunately, once you realize that you can stick you hands into taxpayers’ pockets, the temptation to do so again is hard to resist.
And then there is the lack of transparency. In October of 2013, there was a dustup between another think tank, Think New Mexico, and the Studios over how many films had actually been produced at the Studios. Without a doubt, Think New Mexico was justified in questioning Santa Fe Studios which has given few details on how the tax money they have received has been used.
A November, 2013 story in the New Mexican noted that “Verification of the (Studio’s) job numbers has been less than vigorous. County officials appear to have accepted the hours reported by the studios as fact and have done little to substantiate them.” Santa Fe County needs to increase oversight at a bare minimum before even considering approval of another $22 million.
Of course, the millions of dollars pumped into Santa Fe Studios are only the tip of the iceberg when it comes to New Mexico’s ill-conceived and overly-generous giveaways to Hollywood. The biggest taxpayer rip-off is the $50 million or so each year New Mexico taxpayers throw at the film business in the form of its film rebate program.
Unlike other subsidies offered by the State, the film subsidy is not a reduction or elimination of taxes owed, rather it is a check cut to the film company for between 25 and 30% of taxable spending done in the State. Rather than foregoing otherwise taxable revenue, New Mexico’s film subsidies actually spend revenue collected from other sources.
That is one reason why such subsidies have drawn opposition from across the political spectrum. The liberal Center on Budget and Policy Priorities issued an entire report in 2010 called “Not too much bang for too many bucks.” Another liberal group, Citizens for Tax Justice, wrote in a 2013 blog posting, “Not only do film tax credits cost states more money than they generate, but they also fail to bring stable, long-term jobs to the state.”
Any objective organization, right, left, or center that takes a close look at the economics of film subsidies like those in place in New Mexico finds that they make no economic senses and that they ultimately harm taxpayers and the poor.
Unfortunately, the Legislature seems inclined to keep the gravy train rolling for New Mexico’s film industry at this point. But, Santa Feans can stop throwing their good money after bad by letting the County Commission know that profitable businesses should grow by reinvesting their own money, not by attaining ever-greater taxpayer subsidies.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.