By Eric Witt
In a recent guest column, Rep. Dennis Kintigh argued why he believes the state’s film incentives are bad public policy. Unfortunately, the representative used bad information to back up his stance.
Rep. Kintigh wrote that “two studies” have been done on the return on incentives for New Mexico’s film industry, producing wildly differing conclusions: “One study claims the return to taxpayers is $1.50 for every tax dollar paid out. The other study identifies the return to be only 14.5 cents on the dollar.” He implied that the scope and methodology of the two studies is somehow comparable, and that they simply reach different conclusions regarding the same phenomena, making it difficult to tell which provides the truer picture. This is entirely inaccurate.
The exercise positing a small return on every dollar spent in incentives was a Legislative Finance Committee-commissioned first attempt by the Arrowhead Center at New Mexico State University (which receives the majority of its funding from the Legislature) to computer model one narrow slice of the overall economic impact of film production, using assumed data, and done over the course of a short few weeks. This exercise was never intended to be a definitive illustration of the overall impact of film production, a fact explicitly acknowledged by the model’s authors in the report itself.
The second work, showing a significantly greater return of $1.50 on every incentive dollar spent, was an independent, third-party study conducted over the course of four months by the globally respected accounting firm of Ernst & Young. This study more accurately reflected the total economic returns to state and local governments from film production: It was based on field-gathered data from actual persons and businesses involved directly and indirectly in film production, and revenues to state and local agencies. To equate the Arrowhead and Ernst & Young reports in terms of scope, rigor and accuracy is nonsensical.
Program isn’t ‘hidden in secrecy’
Regarding Mr. Kintigh’s charge that the film program is “hidden in secrecy,” multiple offers were made — and stand — to him and others to sit down and review basic principles of film finance and the economics behind production, and to explain why New Mexico’s incentives, the most productive and efficient in the nation, are structured as they are and how they work.
Rep. Kintigh, who by his own admission has no experience in film finance or knowledge thereof, declined. In fact there is no “secrecy” to the program; we enjoy talking about it because the more people know, the more they understand and appreciate how and why the program operates as it does.
Regrettably, Mr. Kintigh’s rejection of our overtures and his preference to “dialogue” through charges in the media make it impossible to engage in the “open and public examination with a sober and serious discussion” for which he calls.
Film incentives bring money into New Mexico
Whether Rep. Kintigh likes it or not, considered analysis indicates that more money is made in state and local government revenues than is paid out in film incentives — we certainly at least break even — while additionally attracting tens of millions in private investment and creating thousands of jobs and hundreds of millions spent on local salaries, products and services.
Frankly, New Mexico is unique in this regard among states that offer incentives. Most others’ incentives operate much differently than ours — a fact which, like the two economic reports cited above, makes it disingenuous to compare New Mexico’s program with those of Louisiana and California, something Rep. Kintigh also does at great disservice to a public deserving of apples-to-apples comparisons.
To the degree there are legitimate policy and economic issues to discuss regarding the state’s film incentive programs, we wholeheartedly agree with Rep. Kintigh that these should be conducted in a “sober and serious” — and, we would add, informed — manner. On the other hand, if Mr. Kintigh simply does not like the film industry — or what he has said he considers business subsidies generally — as a matter of political principle regardless of the economics, then he should say so, and we can then have that discussion.
We just hope he’s also prepared to have it regarding the oil and gas industry, Intel, education, health care, renewable energy, high tech and other manufacturing and service industries, the military, farming, ranching, etc. — i.e. all the other industries that receive favorable tax status and investments, and which he apparently believes have served our economy so poorly.
Witt is the governor’s deputy chief of staff and film and media adviser.