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$1.50 earned from film/TV production for every $1.00 spent
Posted by Michael R. Barnard on January 20, 2009 at 8:48pm in The Fresno Production Studio Project
Back to The Fresno Production Studio Project Discussions
Some governments spend money to bring film/TV production to them. New Mexico has a very attractive program in place to attract production. Although their program is based on tax credits, it is not so dissimilar from the approach of the Fresno Production Studio Project, which has as a main purpose the goal of attracting production to Fresno.
The government of New Mexico wanted to evaluate the possible success of their program to attract production, and hired prestigious Ernst & Young to analyze the results of their efforts.
Ernst & Young, in a report this month (available online at http://www.taxcreditsllc.com/EY_EconomicFiscalImpactNewMexico.pdf) concludes that the program is very successful.
After thorough study of the State's incentive program, they conclude that the program results in "combined state and local tax collections of $1.50 for each $1.00 of state credits."
Government support to attract film/TV production can be profitable for the region. Further, the industry is a good industry to have in our region, creating civic pride, opening new doors of opportunity, and having a small impact on the environment.
The following is the Executive Summary from the Ernst & Young report:
Ernst & Young
Economic and Fiscal Impacts of the New Mexico Film Production Tax Credit
Prepared for the New Mexico State Film Office
and State Investment Council
January 2009
Executive Summary
New Mexico has provided tax incentives to film productions since the film production tax credit was adopted in 2002. The program has attracted more than 115 major film productions to New Mexico since its adoption in 2002, including 22 films that were assisted through the State Investment Council’s loan participation program. In 2007, 30 films were produced in New Mexico generating $253 million of spending benefiting the New Mexico economy and generating higher state and local tax collections.
This study presents the estimated economic and fiscal impact of the film production tax credit program.
• The benefits of New Mexico’s film production tax credit program extend beyond the direct and indirect economic impacts of film production activities qualifying for tax credits. In addition to the film spending, New Mexico’s economy also benefits from capital investment to support the film industry’s growth in the state and additional film-related tourism.
• Film production activities in New Mexico created 2,220 direct jobs in 2007. This employment impact includes approximately 1,670 below the line employees earning $49,500 annually and 550 actors, directors, and producers working in New Mexico. These 2,220 direct jobs created 1,609 additional jobs in other industries, resulting in a total employment impact of 3,829 jobs.
• Film-related capital expenditures and projected film tourism spending attributable to 2007 productions generated an estimated 3,769 direct jobs and 1,612 indirect jobs, resulting in 5,380 total jobs attributable to capital expenditures and film tourism.
• Combining the 2,220 direct jobs from film productions with the 3,769 jobs from capital expenditures and film tourism results in 5,989 total direct jobs attributable to the film production tax credit. These direct jobs create a total of 3,221 indirect jobs, resulting in a total employment impact of nearly 9,210 jobs.
• The economic activity created by the film production tax credit program also results in higher state and local tax collections. State tax collections resulting from film production activities in 2007 totaled $22.6 million. Additional state tax impacts from capital expenditures in 2007 and film tourism during 2008-2011 are estimated to total $21.5 million in 2007 dollars, resulting in a total state tax impact of $44.1 million.
• Film production expenditures in 2007 qualified for $49.4 million of state film production tax credits to be paid in 2008. Expressed in 2007 dollars, these film credits total $47.1 million. Based on the 2007 value of present and future year tax receipts and the 2007 value of state film production tax credits, the program earns $0.94 in additional tax revenue for each $1.00 that is paid out in incentives. Local governments in New Mexico earn $0.56 for each dollar of state credits, resulting in combined state and local tax collections of $1.50 for each $1.00 of state credits. [emphasis mine]
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