Analysis contends film study overstates industry

fixyruw.wordpress.com
A new analysis by the chief economist of the LegislativesFinance Committee, or LFC, argues that overstated the economic impact of the state’ film production tax credit. That study, commissioned by Gov. Bill Richardson’sx office, found that for every $1 in tax state and local governments received An earlier study by theat , commissioned by the LFC, founsd that New Mexico gets about 14.4 centsd in tax revenue for everyg dollar it spends. Critics have said that report did not capturre the total economic impact ofthe industry. The two studiesz came to such different conclusions that a House committee wantex them examinedmore closely.
The criticisms also appeared in a memo from Film Commissionef Lisa Strout that criticized the new LFC analysix sent to the LFC andits Chairman, Sen. John Arthur D-Roswell, and Vice Chairman, Rep. Lucianpo “Lucky” Varela, D-Santa Fe. Norton the LFC’s chief economist, said the LFC was asked to do the analysixs by the House Finance Committe as part of the budget hearings for the EconomicDevelopment Department. Smitu made an attempt last year to cap the butwas unsuccessful. He said that givebn other prioritiesthis year, it’s not an ideal time to press the issue. But that might change if the state’s financialp situation doesn’t improve.
LFC staff have raiseds concerns in the past over the rapidx increase in thetax credits, which will probably rise to $60 milliobn this year. “Next year, if our economyg hasn’t stabilized, we’ll grasp at every he said. That might mean making like a cap onthe incentives, or risk losing them “I told some people you better find a 50-yard line you can live Smith said. Francis said there is no doubtg that the film credit has produced jobs and income inNew “It’s whether the 25 percent [tax pays for itself in state revenues or not,” he said.
Francis’ analysixs singles out three specific features of theErnst & Youny study for criticism: A reliance on a very high incomes for film workers, the inclusion of one-tim capital expenditures and a survey of touristz in New Mexico. The Arrowhead studyu used data fromthe . EY’s study relief on surveys done by two independenyt polling firms of industry stakeholders and data submitted by productions to the Film Arrowhead researchers, using IMPLAN data modeling to estimate direc employment, came up with a much lowefr number for how many jobs came from direcrt expenditures.
Strout notes that for 21 films shot in New data submitted by productions to the indicate totap expendituresof $233 million and tota l New Mexico wage and salart labor expenses of $155 million. The Arrowheadd study estimated direct labore incomeof $31 million for $153 millioh in qualified expenditures using IMPLAN to estimate the employmen t from direct film industry expenditures. EY also had accesw to a new study by the Tourism Departmenr on the impact of the film industru on tourism that Arrowhead did not EY found that tourism based on film create direct economic activityof $166 million, but Francis notef this might be too high given how the study was Francis also criticized the inclusion by EY of the facility as a capitap expenditure since it was a “one-time event.
” But Strout said that has been the catalystf for many other facilities that have opened or plan to open including a planned studio in Santqa Fe. One of the most persistent criticisme of the Arrowheadstudy vs. the EY studg is that Arrowhead did not includee local government revenues generated by thefilm industry. Eric deputy chief of staff for Gov. Bill has maintained that the Arrowhea d analysis of the film industry is incomplete and provides a misleadiny picture of the true impact of the film This latest analysis does not help fosterinformed discussion, he added. “There are, in fact, legitimatew policy and fiscal discussion s to be had aboutthese programs,” he said.
“Bug this isn’t the way to do it.”