Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
if they are used for other purposes.
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F I S C A L I M P A C T R E P O R T
SPONSOR SFC
DATE TYPED 03/14/05 HB
SHORT TITLE
LOW-INCOME COUNTY FILM PRODUCTION
TAX CREDIT
SB CS/CS/416
ANALYST Padilla-Jackson
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
(*)
(*)
Similar Recurring
General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
* Minimal, indeterminate
SOURCES OF INFORMATION
LFC Files
Responses Received From
Economic Development Department (EDD)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
The Senate Finance Committee substitute for the Senate Corporations and Transportation Com-
mittee Substitute for Senate Bill 416 establishes the “New Mexico Filmmaker Tax Credit” which
provides an additional tax credit against personal or corporate income tax to a film production
company for 5 percent of certain direct production expenditures. The tax credit is refundable, so
that if the credit exceeds the taxpayer’s tax liability, the excess credit would be refunded to the
taxpayer. Eligible production expenditures are as follows:
•
made in New Mexico or by a New Mexico resident for the purposes of this section
•
of which 60 percent of the below-line crew payroll are residents of New Mexico
•
on equipment, goods, services, vehicles or other direct production expenditures provided
by individuals or companies paying gross receipts tax in New Mexico for a minimum of
2 years
•
on rental equipment if it is in New Mexico for a minimum of one hundred eighty-three
days per year
pg_0002
Senate Bill CS/CS/416 -- Page 2
•
that are made for the purpose of producing a television series
The provisions of this act apply to taxable years beginning on or after January 1, 2005. The bill
also evokes an emergency clause, which states that the provisions would take affect immediately.
The bill contains a delayed repeal, effective January 1, 2009.
The bill requires the New Mexico film division of EDD and TRD shall provide a written report
to the Legislative Finance Committee (LFC) by October 15 of each year that reviews and as-
sesses the impacts of the New Mexico filmmaker tax credit.
Significant Issues
EDD believes that the bill will encourage the use of locally owned businesses, services and
New Mexico crew members that have resided in New Mexico for a considerable amount of time.
PERFORMANCE IMPLICATIONS
EDD believes that Senate Bill 416 will assist in meeting the performance measures set by the
New Mexico Film Office in both economic impact and number of worker days, by encouraging
film and media companies to produce films in New Mexico.
FISCAL IMPLICATIONS
According to TRD’s analysis, over $5 million in film production credits have been claimed and
approved over the last two and a half years based on the current 15 percent tax deduction. Due
to the additional eligibility criteria, TRD believes that only a small fraction of the expenditures
eligible for the current credit would be eligible for the additional 5 percent credit, and that the
fiscal impact would be minimal. The SFC substitute bill’s additional criteria leads LFC staff to
also conclude that the fiscal impact of to the General Fund would be minimal.
ADMINISTRATIVE IMPLICATIONS
EDD would be responsible for receiving the required information and determining eligibility for
the credit. Some Film Office staff time will be needed to verify company eligibility.
TECHNICAL ISSUES
EDD notes that on page 4, line 25 and page 5 lines 1-4, the definition of “delivery medium” is
too restrictive and does not reflect current industry standards.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.
According to EDD, a television series whose pilot was shot in Albuquerque last fall is looking to
locate permanently in the State of New Mexico if Senate Bill 416 is passed. They add that a
television series would bring long-term permanent jobs to the state.
OPJ/rrm:rs:yr