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Cutting Film Subsidies — A Smart Call from New Mexico’s Governor

January 12, 2011 at 3:16 PM

Monday’s proposal from Susana Martinez, New Mexico’s newly elected Republican governor, to cut the state’s tax credit for film and TV productions by 40 percent is a smart move.  It’s also noteworthy because New Mexico started the wave of these state subsidies that has swept the nation over the past decade.  As I explained in an earlier report, those subsidies — which more than 40 states now offer — create too few good jobs for state residents at much too large an expense to state taxpayers, especially at a time of large budget shortfalls.

New Mexico’s film tax credit cost the state $67 million in fiscal year 2010, siphoning away funds from important public services, including education, public safety, health care, and infrastructure.

In related news, the Massachusetts Department of Revenue released its annual update of the most thorough study to date of a state’s film tax subsidy.  It shows that the state’s subsidy is even more wasteful than previously thought.  The report shows that:

  • In 2009, the cost to Massachusetts for every full-time equivalent job filled by a resident and created by its film tax subsidy was $325,000.
  • For every dollar of film subsidy that the state doled out in 2009, it received only 13 cents in return in revenues generated by economic activity that the subsidy induced.

State policymakers looking to close the continuing gap between weak revenues and rising needs should follow Governor Martinez’s example and limit — or, better yet, eliminate — these inefficient subsidies.