Thursday, January 22, 2009

Incentive Bait Reels in Hollywood Production Bucks


Guest Columnist Eric Witt (
film and media industries adviser to Gov. Bill Richardson) continues to make the case for the importance of incentives in yesterday's Albuquerque Journal:

Incentive Bait Reels in Hollywood Production Bucks

By Eric Witt
A new study that looks at the impact of the film industry on New Mexico's economy, conducted by the respected Ernst & Young company, shows strongly positive results: Hundreds of millions of dollars in direct film production spending, and over 9,000 new jobs attributable to the industry benefitting dozens of communities and hundreds of local businesses across the state.
There is strong evidence of positive effects not only for direct film production, but increasingly for the hospitality, tourism and other support sectors as well as priceless marketing of New Mexico's unmatched beauty and aggressive business environment to the world.
Most pointedly, the film study shows that state coffers directly recover almost every penny paid out in production tax incentives through increased revenues generated by the film industry. This is consistent with Gov. Bill Richardson's long-held position that the state “breaks even” for extending a nominal 25 percent rebate level to the film industry.
Additionally, when county and local governments are factored in, the return is another 56 cents on top of that, making for an overall positive return to combined state and local governments of about $1.50 for every incentive dollar spent.
And note that this is only governmental revenue; it does not take into account the vastly greater increases to private businesses and workers through the $700 plus million in direct production spending and the $2.2 billion in economic activity attributable to this industry since 2003.
What does this mean on the ground?
Well, we can start with the thousands of well-above-average paying jobs that have gone to ordinary New Mexicans across the state, jobs with health care and benefits.
We can point to the hundreds of businesses that have been created, been able to expand or, in some cases, simply survive due to this industry.
We can talk about the positive offset the industry has had in the general economy as other sectors have declined — the most recent and dramatic example being the past week's job fair for ReelzChannel in Albuquerque at which 2,500 applicants showed up for 100 jobs.
As the new study bears out, the advent of the film industry has contributed significantly to New Mexico's economic position of relative strength versus other states and the national and global economies. Essentially we have created a $2.2 billion stimulus package and more than 9,000 new jobs to the great benefit to the private and public sectors, at a critical time.
These Ernst & Young findings stand in stark contrast to those put forward last summer by the Arrowhead Center at New Mexico State University, which drastically underestimated the economic impact of the film industry.
To be sure, that earlier NMSU study was, by its authors' own admission, extremely narrow in focus and based wholly on a standardized computer model and not on actual field work; it was never intended to be portrayed as a definitive or even accurate depiction of the overall effects of the industry or its return to the state.
Yet certain interests in the state have wrongly held it out as such, despite being informed in detail of the NMSU study's limitations when it was released last August.
While Ernst & Young's work is itself a broader but still not complete accounting of the industry's overall effects, we can only hope that those same interests will embrace this new report — a rigorous, field-researched study conducted by a globally respected independent party — with the same enthusiasm.
The bottom line is that the new analysis affirms the gut feeling and daily observations of most New Mexicans: The making of movies here is having tremendous positive effects for New Mexico precisely when we need them the most.
Eric Witt is the film and media industries adviser to Gov. Bill Richardson.

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