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There is a sense within the industry that the changeover promised by the November election is an opportunity not only to keep things rolling in Tamalewood but also to buoy and ultimately boost the business of film and television work in New Mexico.

And the gubernatorial hopefuls seeking to succeed term-limited Gov. Susana Martinez say some potentially consequential tweaks to the state’s film and television tax incentive program — including removing or raising the payout cap some view as an impediment to future growth — could round out this increasingly prominent piece of the state economy and fully re-establish New Mexico’s status in the broader moviemaking industry.

“Georgia stole our business,” said U.S. Rep. Michelle Lujan Grisham, D-N.M. “Fairly and squarely. They invested in schools; they invested in studios; they invested in an entire infrastructure. We should be doing the same.”

The next governor will inherit a film economy that has drawn more in-state direct spending from film and television productions each year since 2014, topping out at $505 million last fiscal year.

In the current fiscal year, however, spending is trending the other way: There was only $97 million spent in the state in the first two quarters, according to the New Mexico Film Office, which would put the state on track for a nearly 60 percent decrease.

New Mexico had seen only 17 productions with at least a $1 million budget through those two quarters. There were 52 such productions the previous fiscal year.

A slowdown, if it is one, might be seen as a consequence of the chilling effect of the annual cap on the state’s tax-incentive payouts, a $50 million ceiling installed by legislators at Martinez’s urging in 2011.

It also could be ascribed simply to the whims of a fickle industry that didn’t have as many Westerns in the pipeline this year.

But the dynamic suggests the next administration will have the choice, and perhaps the imperative, to stabilize and accelerate what has been a bright spot in the state’s hot-and-cold economy — or otherwise see it sink.

U.S. Rep. Steve Pearce, the only Republican in the race and thus his party’s presumptive nominee, emphasized a “fiscally responsible and sustainable” approach to the film business, which he said must be made more “geographically diverse, more economically sustainable and more permanent.”

Overall, it is “a uniquely important asset for our state’s future,” Pearce said in a statement, in which he floated “new collaborative education and worker training and a focus on keeping post-production jobs in New Mexico.”

His general approach — the finer points of which are still being hammered out, an aide said — contrasts sharply with that of then-candidate Susana Martinez, a fellow Republican with whom Pearce has not always aligned.

Martinez, who came into office talking tough about reining in the incentive program, saw production activity fall off as her term began, with previously skyrocketing spending numbers tumbling to a low of $162 million in 2014.

But Martinez changed her tune, signing into law the 2013 “Breaking Bad bill” that enhanced incentives for television productions and celebrating industry spending at annual news conferences.

Still, amid the ballooning growth, the cap has remained in place, and industry advocates in the state have long railed against it as an arbitrary roadblock to further expansion that creates a bottleneck of past-due rebates owed to production companies.

End of the cap?

Jeff Apodaca, a former media executive and Democratic candidate, will address those rebates with haste, he said through a spokesman.

“New productions have slowed because of Gov. Martinez holding back payments,” said Peter DeBenedittis, communication director for Apodaca. “Paying this off immediately will be a priority.”

Lujan Grisham, in a phone interview, said the same thing.

“In the transition, we can sweep money and make those payments, ahead of 2019,” she said. “No one’s been talking about it. I want to hear from legislators and look at what the budget is, but we have to make these back payments.”

State Sen. Joe Cervantes, D-Las Cruces, the third candidate in the Democratic primary, likewise said it is essential the state “meet obligations in a timely way” and beef up its internal film-focused infrastructure.

“The film office has achieved remarkable success with very little increase in its budget or staffing,” Cervantes added. “And I’m convinced that with greater support, we would see a corresponding benefit to the state.”

Messages seeking clarity on the extent of past years’ rebates that have rolled over were not returned by a spokesman for the state Economic Development Department, within which the state film office operates. As of the end of February, the state Taxation and Revenue Department website showed 34 film production refunds totaling $27.8 million for the current fiscal year.

The cap’s continued existence, despite Martinez’s friendlier posture to the industry, remains cause for consternation for producers who want more certainty on when they’d get their rebates from the state, said Eric Witt, who leads the joint city-county Santa Fe Film Office.

“But as important is re-establishing an affirmative and aggressive support for the business,” Witt said. “We could actually return to the trajectory we were originally on.”

In Georgia, he pointed out, the film industry draws billions of dollars in direct spending — $2.7 billion in the most recently concluded fiscal year, according to state figures.

“At a certain point you want to take off the shackles and turn the thing loose and see its full potential,” said State Sen. Jeff Steinborn, D-Las Cruces, who is board president of the nonprofit Film Las Cruces.

Apodaca would eliminate the cap, “allowing film production to grow to three times the current volume,” said DeBenedittis, himself an erstwhile candidate for governor.

Lujan Grisham said she would not only remove the cap but “redesign how we do the rebates so those applicants feel like we’re open for business, not that we mistrust how they’re using these rebates — because that’s what this governor’s done.

“If the Legislature wants to have some formula for an economic crunch, I’m not going to say I would be totally opposed to that,” she added. “But it’s contrary to how these things work. If you want the industry to be here, you have to lift [the cap] in its entirety and say, ‘We’re open for business,’ and that is the strategy I want.”

Pearce, though in the same ballpark, was more circumspect, saying in his statement: “While we must raise the cap on film tax credits, that action must only be part of a plan, not the end point of a plan.”

Cervantes said he’d support raising the cap but cautioned the state might lose some predictability in its budgeting process without one. Still, “It ends up being a limitation on our willingness to grow a particular segment of the economy,” he said. “That shouldn’t make any sense to us. When we have a thriving segment of the economy, we shouldn’t be putting restrictions on it.”

Winds of change

There are outside circumstances that also could factor into the near-term future of the state’s film economy.

The new Republican tax law includes a provision that observers expect will incentivize the return of intellectual property rights that had been stashed abroad. And the United Kingdom’s scheduled March 2019 departure from the European Union could have implications here as well.

Both developments might unsettle film and media businesses based in Canada and the U.K. to the point that they look back to the United States, said Witt, who helped put together the then-nascent state film business under former Gov. Bill Richardson.

New Mexico, with the right policies in place, could stand out as a potential landing spot.

“All things being equal, New Mexico is a much more attractive place to produce” than other states with enviable film programs, Witt said. “We’re closer [to Los Angeles]; the weather’s better; and we have the infrastructure, the crew, the soundstages. You want people saying, ‘Why the hell are we going to Louisiana when we can get the same deal in New Mexico?’

“I won’t say there are expectations, but there is hope that we kind of get our act together and get back to where we were in terms of being a leader in this industry” after the election, Witt added.

“The growth curve we were on would have put us at about $2.5 [billion] to $3 billion in production today,” he said. “People are like, ‘You’re crazy.’ No, look at what Georgia did last year. They stepped into our position when we dipped down in 2011. We can return to that if we play our cards right.”

Possible initiatives

A few of the candidates said a key step on the path forward will be drawing more film activity to areas outside the Albuquerque-Santa Fe corridor.

Last year, Martinez vetoed a measure, sponsored by Steinborn, that would have extended additional tax rebates to some productions for shooting at smaller facilities. The bill passed both chambers overwhelmingly; Martinez, in her veto message, wrote she had “not seen data indicating the need for expanding the credit.”

But the idea might find traction with Pearce, of Hobbs, who in his statement suggested he’d pursue a more “geographically diverse” industry. “My number one priority as governor will be bringing economic opportunity to every New Mexican,” he said. “We must increase the film industry’s reach.”

Cervantes also said there is the potential for growth in exploring the more rural parts of the state. “New Mexico has always enjoyed the reputation of being a creative state, where artists thrive,” he said. “It’s part of our heritage.”

Lujan Grisham said film would be a day-one priority. The day after the election, to be precise.

“Day after, I want members of the film industry here and from around the country invited to a meeting,” she said, adding she’d pursue an additional incentive for areas outside the Interstate 25 corridor. She also said she’d “mandate a coordinated effort” between her film office, economic development department and tourism department to “create that business-friendly environment.”

“These are the kinds of industries New Mexico is going to be known for,” she said. “And it won’t be one we just draw in, where they come here, work here and then leave and maybe come back in a few years. This becomes the next place where people stay. I want homegrown talent, and I know we have it. We invented the creative economy. Let’s hold onto it; let’s show it to the rest of the world.”

Contact Tripp Stelnicki at 505-428-7626 or tstelnicki@sfnewmexican.com.

New Mexico’s film tax incentive cap

New Mexico offers up to 25 percent in rebates on some expenses for film productions and up to 30 percent for television series. In the simplest terms, a production that spends $10 million in the state that qualified at the 25 percent rate would receive $2.5 million back.

In 2011, the state established a limit of $50 million that it can pay out to productions every year. The state cannot exceed that ceiling but can shift expected rebates over to the next fiscal year.

Advocates within the state industry have said the cap threatens to throttle growth, as production companies might get skittish about when they would receive their rebates and look elsewhere. Others, including some legislators, have said it helps ensure stability in the budgeting process.

The other board members agreed, but only after testimony from nearly 20 people — not all of whom supported the board action — and a lengthy debate about whether such an act will make any difference.

“Not accepting this money is not going to take away that fear of going to school,” said board member Maureen Cashmon, an Air Force veteran who said the board was moving down a “slippery slope” by taking the action.

She and several people who spoke during Tuesday’s board meeting said the action is a political move that unfairly targets a national organization that includes a lot of law-abiding gun owners who also want to do something to stop school shootings.

Some parents and supporters of the ROTC program, a leadership program that teaches military skills including marksmanship, said the board has inadvertently pulled the students involved in Santa Fe High School’s successful ROTC program into a complex and heated argument over how best to deal with shootings in schools.

“Our [ROTC] team has ended up in the middle of a debate that they did not create,” said parent Cynthia Pacheco, who warned the board that people who support the NRA may now decide to no longer support the ROTC program.

But others, including students, educators and retired teachers, spoke just as passionately about the need to send a message to the NRA, which generally opposes gun control legislation.

Some of the students spoke about the daily fear they feel given the recent wave of school shootings, including one in Parkland, Fla., that took the lives of 17 people in February, and a December incident in Aztec, where two students as well as the shooter died.

Adding to local tensions, Santa Fe High School experienced two incidents involving shooting threats by students at the campus late last year.

“We are the ones who are in the schools, we are the ones who are getting the backhand of it all,” said Capital High School senior Gabriella Rodriguez, who serves as a nonvoting student member of the board of education. “We’re scared to go to school. We have teachers who are scared to go to school.”

Military veterans involved with ROTC, which stands for Reserve Officers’ Training Corps, stopped short of opposing the proposal, but painted a picture of a student program that has grown in popularity and success in part because of backing from the NRA, which has included providing air guns, ammunition, targets and other equipment.

“Support from the NRA has allowed our program to get quality equipment that has turned these kids into national champions in a very short time,” said Lt. Commander Craig Stapleton, who oversees the program.

He said the program also receives grant money from the Los Alamos National Laboratory Foundation. “There may be people who are anti-nuclear weapons,” he told the board. “Is that an issue?”

For the past several years, the NRA has provided Santa Fe Public Schools with about $4,000 worth of equipment for the ROTC program at Santa Fe High School. The district invests $117,000 a year in the program, but that does not include money the program receives from other sources.

The ROTC students have been racking up a number of local, state and national awards in recent years. In March, four students in the program earned top honors at the 2018 All-Service National Junior ROTC Championship, a marksmanship competition for high schoolers, beating out 25 other four-person teams from across the country. A second Santa Fe High team placed eighth in the shooting match, held at Camp Perry in Ohio.

A recent Associated Press report said the NRA has given more than $7 million to some 500 schools across the nation, often for ROTC programs, between 2010 and 2016. School districts elsewhere have also decided against accepting NRA support.

In a statement released by the NRA before Tuesday’s vote, spokeswoman Catherine Mortensen said, “The money in question is raised by individuals within the Santa Fe community. The school board would punish a program such as JROTC, which teaches leadership and develops character among local youth, just to make a political point. The school board should be made to absorb the costs of this program out of their own budget.”

And that may happen. Though Carrillo and board member Kate Noble each said they had already talked with anonymous donors who agreed to cover the $4,000 grant money for at least two years, Cashmon asked for an amendment to the action that requires the district to use money from its operational fund to cover the $4,000 if those community members do not come forth to do so.

But as temperatures climb and parks prepare for another season of potentially record-breaking visitation, Interior and National Park Service officials are rethinking the plan based on public comments that inundated the NPS website over an abbreviated 30-day period.

“So the NPS would more than double the current entry fee for peak season,” read the first of 50,000 comments Interior provided to The Washington Post. “I know if I were considering a trip to one of these parks and suddenly found that the trip would incur an exorbitant entrance fee, I would not … repeat not take my family on this trip.”

“$70 is insane!” another comment declared. “What the hell? You need to go to Congress, get them to fund NPS, and then get our president to actually sign it.”

For every comment in support (“I WHOLEHEARTEDLY APPROVE of this. It’s about time rates went up,” one submission said), there was a flurry of opposition. “This price hike is just too much,” said comment No. 11,424. “Having to pay $70 just to get in would definitely make me consider other options for our family vacation.”

An Interior official familiar with the changes now being discussed said some type of increase remains almost certain, but the dramatic hike is being reconsidered for fear that it would cause visitation to plunge, reducing sorely needed revenue at top destinations such as Yosemite in California, the Grand Canyon in Arizona, Zion and Bryce in Utah, and Yellowstone in Montana, Idaho and Wyoming.

“We’re working to respond to those … thoughtful and well-put comments,” the official said. “Our ultimate goal when it comes to entrance fees is to make sure the parks get 80 percent of that revenue … but we also don’t want to put a burden on our visitors. We believe there is room to increase the fees and the annual passes.”

The parks with no entrance fees will stay that way, he said.

The official would not disclose the revised rate structures being considered but said the goal is a more modest adjustment to fees that haven’t increased in a decade. A 10 percent fee increase for all parks with entrance charges is on the table, as is a $20 increase in the $80 seasonal and senior passes. The agency is also debating whether to increase tour buses’ flat-rate charge, he said, or to implement a per-passenger bus fee to increase revenue.

Zinke and the Park Service’s interim director continue to meet on the issue, according to the official, who only was authorized by Interior to speak anonymously.

In his October announcement, Zinke said the fee increases he was proposing would raise $70 million to help address a nearly $12 billion maintenance backlog with deteriorating park buildings, restrooms and roads. “Targeted fee increases at some of our most-visited parks will help ensure that they are protected and preserved in perpetuity and that visitors enjoy a world-class experience,” the secretary said in a statement.

But Zinke backpedaled in congressional hearings last month, signaling a change in his position in response to questions from concerned committee members. He testified at a Senate hearing that Interior was now undecided about the rates and looking at various alternatives. At a House hearing that same week, he said the aim was to not hurt families.

Two bills in Congress have been introduced to address the maintenance backlog using royalties from federal onshore and offshore energy production.

Zinke’s critics noticed a change in his tone. It “gives us hope that the administration has heard the outcry from the public and will abandon or significantly alter their proposal,” said Emily Douce, director of budget and appropriations for the National Parks Conservation Association. The association’s analysis of submissions during the public comment period showed 98 percent were opposed to the fee increase.

Rich Dolesh, a vice president for the National Recreation and Parks Association, said Monday that a survey conducted by a coalition of 55 national and local groups showed that people who were less likely to visit a park under the proposed fee hike were individuals who earned $30,000 or less annually. According to the survey by the Outdoors Alliance for Kids, nearly 70 percent of respondents opposed or strongly opposed a rate increase, and 83 percent said it would make a park visit more difficult.

“If you don’t keep the next generation of Americans connected and valuing our national parks, it would irrevocably break a bond that’s been there since the parks were created,” he said. “And if it’s a fee increase that’s a barrier, that’s not right. We should be looking at better ways to get our families to access our parks.”

Dolesh said increasing the price of annual and senior passes is a “tough” decision since retired Americans often have fixed incomes. He was also skeptical of any idea to increase tour bus fees because the buses are often filled with schoolchildren.

That was the point made in one public-comment submission: “As a current employee of the NPS and an avid visitor of NPS sites, I believe increasing the rates in the 17 parks will make the parks unaffordable for families and low-income individuals.”

But Dolesh echoed several comments about charging more to visitors from Europe, Asia and other foreign countries who tour national parks. “It makes sense,” he said. “Those are people who can clearly afford to pay, and other countries do this.”

“Some may say an increase for those tourists coming from other countries may discourage them from visiting our parks, but I disagree — they are more than willing to pay these fees,” according to comment No. 5,109. “This is evident by the sheer numbers of European and Asian tourists that flock to the parks via tour buses and package deals from excursion companies.”