Only with Martinez math could lowering business incentives create more jobs and dollars

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Only with Martinez math could lowering business incentives create more jobs and dollars

Only with Martinez math could lowering business incentives add jobs and increase state revenues.   But, that's exactly what the governor and Republican legislators thoug ...

Only with Martinez math could lowering business incentives add jobs and increase state revenues.

 

But, that’s exactly what the governor and Republican legislators thought when they changed New Mexico’s successful film rebate program last year.

 

…the Martinez administration said tough budget times call for tough measures. Last year, the film rebates cost New Mexico more than $70 million in tax revenue. Legislators said the reduced incentive would bring in an extra $25 million in state revenues. (KRQE, Jan 13, 2011, http://www.krqe.com/dpp/news/politics/film-tax-rebates-draw-heated-debate)

 

The administration heralded the cap on film incentives as a fiscally responsible decision despite warnings from industry officials who assured the governor that they would simply take their business, and jobs, elsewhere.

 

“This particular way would effectively kill the industry,” said Rebecca Stair, a location manager on movie sets. “There are 42 other states with incentives, and businesses would just go elsewhere… (KRQE, Jan 13, 2011)

 

We have people who say the incentives are a waste of money, and we have people who say there are 30,000 jobs for our state, and those are knowable answers,” said Sen. Tim Keller, D-Albuquerque. “I think it’s premature to play politics with 20,000 jobs or so, especially when we know there’s an actual answer out there.”

 

At yesterday’s LFC meeting, DFA Secretary Tom Clifford told legislators that film rebates for 2011 would fall far short of the new $50 million cap pushed by the governor and Republican legislators.

 

 “What we did by capping the film credit is scare off business,” Sen. John Sapien, D-Corrales, said during a legislative hearing Wednesday in Rio Rancho. (Albuquerque Journal, July 13, 2012 – subscription required)

 

In simple terms, lower rebates mean that less money was spent on film projects since the governor’s new cap policy went into effect.  Contrary to their odd math projects, the state LOST revenue and jobs under the policy.

 

Less money spent upfront means less tax income coming into the state as well as to local governments and local businesses supporting film business.  And with labor costs being one of the largest components of any project, fewer industry spending means fewer jobs and more unemployed film workers.  Not the best policy for a state losing 5,000 jobs a month.

 

Only with Martinez math could lowering business incentives add jobs and increase state revenues.