Film Works Shows California Film Incentives More “Enchanted” than New Mexico’s

Posted on February 28, 2011 by

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California film and television industry workers should be thrilled about the recent developments in New Mexico (the land of enchantment) and the reduction of their once-vaunted film incentive program.  Not thrilled, however, is New Mexico’s former Governor Bill Richardson (D), who signed the original incentive legislation into law in 2003.

Writing in an opinion piece in the New York Times over the weekend, Richardson correctly points out how important the industry is, but incorrectly tries to frame efforts in his his state and others as a way for the United States to recapture its “most important cultural export”:

IN recent years more than 40 states have offered incentives for movie and television production, recapturing “runaway” film projects that had left America for places like Canada, Australia, New Zealand and Eastern Europe. This has not only brought significant economic benefits back to our shores, but also has secured America’s most important cultural export. After all, it is through film and television that many people from other countries come to know us — our values, our expressions and our freedom.

Not so fast Mr. Richardson.  New Mexico was not trying to stem runaway production to foreign nations, it was trying to cause productions to go from places like California to New Mexico, instead.  The same goes for states like Louisiana, Michigan and Massachusetts.  State interest, not national interest, is the real motivation behind the decision to offer film  incentives, and we shouldn’t pretend otherwise.

Also suspect are Richardson’s claims about how film is “working” in New Mexico and the benefits which states with strong incentives stand to reap:

Some politicians call the incentives fiscally irresponsible, or giveaways to “liberal” Hollywood. The latter charge is mere propaganda. The former gets traction in states whose programs are not well designed. But when incentives are especially effective — as they are in New Mexico, Louisiana and Michigan — they can bring huge benefits to the state economy….

As a result [of New Mexico’s film incentive] we created more than 10,000 jobs in this industry and in supporting businesses, bringing nearly $4 billion into our economy over eight years.

California crew members staying in New Mexico while working on Marvel Studio’s upcoming film, The Avengers might want to point out that they are not “creating” any jobs “in this industry”, as Richardson maintains.  Rather, New Mexico’s film incentive and others like it, are destroying and displacing jobs in places like California and New York.

Because of film incentive programs in other states and jurisdictions, California has suffered to the tune of 36,000 unrealized jobs, the accompanying $2.4 billion in lost wages and a $4.21 billion economic impact, according to a July 2010 report from the esteemed Milken Institute.

And, as we pointed out in last Friday’s post, Part Two: California Film Incentive–An Effective Weapon for Fighting Runaway Production, there is a major distinction between film and television tax incentives in California and New York, which are designed to fight runaway production, rather than promote it.  Governor Richardson and film backers in these states are keenly aware of at least one significant detail:  without overly generous film and television cash subsidies, productions would stop flocking to their states.  And as states like New Mexico and Michigan are finally starting to realize, costly film incentives are simply not sustainable.

To be fair, some states, like Louisiana, do not see film incentives as a permanent part of their long-term strategy to build a “sustainable” industry.  They want to use their incentive program as a means to build necessary infrastructure like sound stages and post-production facilities.  Once in place, the thinking goes, the state can end the incentive because the “new” industry will have everything it needs to be self-sustaining.  The jury’s still out on that one.

States where the motion picture and television industries are not based (states other than California and New York) will likely never be able to compete without costly, unsustainable incentives.  Nevertheless, the overwhelming majority of states with generous film incentives have been slow to accept this reality.  It’s time for a reality check.  When the playing field is level, California wins.

Film Works decided to compare the effectiveness of New Mexico’s film incentive program (which has been one of many helping raid California) to the one recently enacted in this state.  Despite having a much more conservative and modest incentive in place for just two years, California is seeing a much greater return on its investment than New Mexico, which has had eight long years to make a difference in that state.

California vs. New Mexico:

Consider this: In just two years, the total economic impact of the California Film & Television Tax Credit has been greater than the economic impact of New Mexico’s film permit incentive over the program’s entire eight-year run.

To recap from last week’s post, the combined economic impact from California’s Film & Television Tax Credit for 2009-2011 includes $2.2 billion in aggregate spending by qualified projects, $6.5 billion in economic impact for California businesses and the creation of over 40,000 Full Time Equivalent (FTE) jobs.

Compare this to data from the Motion Picture Association of New Mexico, a trade group promoting the New Mexico film incentive.  From 2003 to 2011, direct spending by productions in New Mexico was a combined $1.2 billion, which had an aggregate economic impact of $3.6 billion:

But it gets worse (at least for New Mexico taxpayers!)  By our calculations, the average cost to New Mexico taxpayers for each new job “created” by their incentive is over $65,000!**  But, according to the Motion Picture Association of America, the “average salary for a film employee is $49,500 a year” in that state.  This means New Mexico is spending over $65,000 to create a job that pays just $49,500, a waste of more than $16,000 per job!

In California, we spend $6,667 on incentives to retain one film job.  With just the $16,000 New Mexico throws away on grossly inefficient spending for each single job they “create”, California, under its film incentive, could retain almost three jobs paying an average annual wage of $85,000 each!  So once again, that when it comes to cost effectiveness, California’s incentive has the competition beat:

How You Can Help Film Work in California:

1.  Help set the record straight about the effectiveness of California’s Film & Television Tax Credit:

Unfortunately, one of the common perceptions in the California film community is that the California Film & Television Tax Credit is a “drop in the bucket” that is too limited and cannot do enough to help keep jobs in the state.  This is simply not true.  In fact, evidence argues the program does work and should be expanded.  The negative misconceptions only serve to undermine public support for the program and the state’s film industry.  Armed with the information in this article and last week’s Part Two: California Film Incentive–An Effective Weapon for Fighting Runaway Production, you can confront misperception with facts.

2.  Make Your Voice Heard With an “I Am Hollywood” Video:

Last week, Film Works started its “I Am Hollywood” project.  Let your voice be heard!  Watch Todd Lindgren’s submission and learn how to submit yours today so Film Works can help tell your story!  Each video submission will be featured on the Film Works site, Facebook page and YouTube channel.

3.  Show Support for Film Works and Help Spread Awareness:

Request a Film Works bumper sticker and be sure to display it.  If you are not already a fan of Film Works on Facebook, be sure to check it out and “like” our page, and encourage others to do the same.

You can also help promote the Film Works L.A. web site (www.filmworksla.com), which is critical to increase awareness.  Your help on driving new eyes to the web site is critical.  If awareness of the campaign does not grow, neither will its impact.  That said, Film Works encourages you to watch the following video and then email it to as many people you know, especially if they live in California!:

**From 2003-2011, the combined total of “worker days” generated by the New Mexico film incentives was 882,716.  Given that the average, fully-employed, individual works an average of 258 days each year (accounting for weekends and holidays), this translates into 3,421 full time jobs.  Given the total cost of the approved credits ($223.9 million since 2003), the cost for each of these 3,421 jobs is over $65,000 each.

Calculating the cost per job in New Mexico another way yields even less favorable results.  In 2002,  the year before New Mexico’s film incentive took effect, 1,394 people were already directly employed in the “motion picture & video industries”, according to the U.S. Bureau of Labor Statistics.  In 2009, there were just over 2,900.  Assuming the growth in the employment of roughly 1,500 jobs is solely attributed to the incentive program, the cost to New Mexico taxpayers for each new direct job in the industry is a staggering $148,666!  Film Works elected to use the more generous calculation to prepare the chart above. 

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