Make way for incentives ... again

Bette Davis once famously remarked, "I don't take the movies seriously, and anyone who does is in for a headache."

Davis' conclusion seems especially apt if you've been following the continuing debate over the impact of government incentives on the film industry in New Mexico. I figured I had put this story — which I brought up in a "Big Picture" column about a month back — to bed for a while, but several events made me rouse it.

First, Nick Smerigan, chief operating officer of Albuquerque Studios, wrote me a letter praising the state's film-incentive program as "one of the most solid and fair" in the country while acknowledging that the discussion about incentives will continue as long as people don't understand the industry being built or the impact it has on their communities. "No matter the industry, all incentive programs are intended to create jobs, fuel economic development, attract private investment, and give hope of a bright future for citizens statewide," he wrote. And he's right.

Then The New Mexican got an unsolicited letter from Rep. Benjamin Rodefer, D-Corrales, who urged the Legislature to create a Film, Arts, and Culture Committee to study legislative issues related to these topics (including incentives). Rodefer, who is against any repeal of film incentives, told me, "We don't want editorial comment — we want to get to the facts. If it's the largest industry in the state, why don't we have a committee studying it to make decisions for the people of New Mexico — rather than those who have a vested interest or who are trying to convince us with their own studies." He's right.

Then, last week, the Rio Grande Foundation — which defines itself as a free-market research and educational organization designed to study public policy — published an article by Jim Scarantino that said a state-sponsored report on the program's financial benefits is full of holes. (See "New Mexico's Hollywood Subsidies: A Tale of Two Economic Studies" at riograndefoundation.org.) He was referring to the study done by the accounting firm of Ernst & Young and funded by the New Mexico State Film Office and State Investment Council, which said (among other positive things) that the incentives created 2,200 jobs and roughly $1.50 in net tax revenue for every dollar spent. The earlier study by the Arrowhead Center, the economic branch of New Mexico State University in Las Cruces, said that the state is only earning about 14 cents for every dollar spent on the film industry. That study was paid for by the state's budget-minded Legislative Finance Committee (LFC). The two studies used different data, often culled from different sources, and covered different time periods. You can find them both online and make up your own mind about their merits.

Scarantino, an Albuquerque-based journalist who was contracted by the Rio Grande Foundation, has written opinion pieces for the Albuquerque Journal and appears regularly on KNME-TV's weekly panel segment The Line. In his incentives piece, with its sarcastically comic bite and cowboy-movie allusions ("Two studies by two big guns reach opposite conclusions, thus forcing a standoff at high noon"), he focuses on LFC chief economist Norton Francis' revised comparison study (dated March 7) of the Arrowhead and Ernst & Young reports. In that document, Francis said Ernst & Young "overstated the case for the fiscal impact." To further complicate matters, that report also included Arrowhead's comparison of the first two studies.

"Mostly I was just reporting on what Norton Francis found," Scarantino explained. "I feel that the Legislature failed to consider the work of the chief economist in this case. Why have a guy like him if you don't use him?" He's right.

LFC director David Abbey told me that although Francis works for the committee, the report was "a good independent analysis." Abbey added that the continuing debate about the value of the incentives won't be easily resolved. "There aren't any straightforward, easy answers to this. If there's a lot of money at stake, a lot of assumptions can be made that are judgmental and that can be a challenge to analyze." He's really right.

Eric Witt, the governor's point man on film and media, rebutted many of the points in Scarantino's article, adding, "Instead of engaging in a constructive dialogue based on knowledge of finance and film industry, they're throwing a bomb to the media and waiting for people to respond. It's sensationalistic; it gets them press coverage, but it does nothing to educate the public." He's actually right, too — Scarantino told me he wrote the piece in a lively, almost confrontational style to draw attention to the issue again.

I'm glad the discussion continues, and I'm truly not expecting anyone to ever come up with 100-percent accurate facts about the impact of the incentives. Let's face it, more than 40 states are offering incentives now, and California is getting so nervous that it just passed legislation approving incentives to keep the business at home.

And I'm very aware that many people who support the business have jobs at stake. Frankly, I probably wouldn't have a newspaper column if there weren't a film industry here. Even Scarantino acknowledged that the film industry touches many lives — including his. "My house is in Sunshine Cleaning!" he said, referring to the dark comedy, shot in Albuquerque, that is playing in cinemas. "In one scene, they pan across to my house, but we weren't compensated for the shot."

The point is, this program, which costs tens of millions of dollars every year, is funded in large part by taxpayers, and we all have a right to know how it's working — and whether it's at least paying for itself. So the dialogue should continue, and the questions should keep popping up, and people in the know should do their best to answer them. A clean, transparent conversation about all facets of the industry is healthy, even if some of the people involved get offended in the process. So let's maintain that conversation without getting too stuck on what one study, or counterstudy, says.

Keep the aspirin handy — just in case.