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F I S C A L I M P A C T R E P O R T

SPONSOR Arnold-Jones

DATE TYPED 03/04/05 HB 1018

SHORT TITLE Film Production Tax Credit Requirements

SB

ANALYST Padilla-Jackson

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Indeterminate Indeterminate

Severance Tax

Permanent Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to House Bill 122

SOURCES OF INFORMATION

LFC Files

Responses Received From

State Investment Council (SIC)

SUMMARY

Synopsis of Bill

House Bill 1018 would restrict the State Investment Officer’s (SIO) ability to purchase film cred-

its from eligible New Mexico film projects. Currently, the SIO is allowed to purchase a portion

of an anticipated tax credit available to a film production company. House Bill 1018 would re-

quire that at least 10 percent of these purchases of film production tax credits that are made

available to film production companies that have corporate officers who are each residents of

New Mexico.

Significant Issues

According to the SIC, the provisions of this bill would disallow any purchases of film production

tax credits if the ten percent rule was could not be met. According to the New Mexico Film Of-

fice, little if any of the film production tax credits have gone to film production companies that

have corporate officers who are New Mexico residents. It is doubtful that this would amount to

ten percent or more in any one year over the next several years. Thus the effect of this legisla-

House Bill 1018 -- Page 2

tion would be to prevent any purchases of the film production tax credits.

SIC also cautions that the current statute is meant to incentivize film production companies to

come to New Mexico to produce their projects and thus hire New Mexico residents as cast and

crew. If this incentive cannot be offered, film projects could decide not to film in New Mexico

and may threaten local jobs in the film industry.

FISCAL IMPLICATIONS

The fiscal impact of this bill is indeterminate due to the uncertainty regarding the ability to meet

the 10 percent rule and the uncertainty regarding the investment earnings that the SIC could po-

tentially forgo if these purchases could not be made.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 1018 conflicts with House Bill 122, which would also amend the same law. House

bill 122 removes the ability for the state investment officer to purchase film production tax cred-

its and, instead, allows the ability to loan against the film production tax credit.

ADMINISTRATIVE IMPACT

The SIC would need to track where corporate offices of a production company reside.

OPJ/lg