Priming the economic pump
Economists call them economic engines, and the rest of us call them our golden geese. Whatever they’re called, we need to trim spending carefully and, in some cases, feed the goose.
Two cases in point: Ruidoso Downs Racetrack and the film industry.
During the last legislative session, track supporters tried and failed to get a tax break that will allow it to compete with neighboring casinos on the Mescalero Reservation. Without it, the track plans a move to Las Cruces, leaving a $28 million hole in the Ruidoso economy. The measure, which would have cost the state about $1.3 million, died in a Senate committee two years in a row.
Can anybody imagine Ruidoso without its track?
Legislative decision making and news coverage seem to bog down on “the racino’s millionaire owner.” This is immaterial. Any owner, millionaire or otherwise, who’s losing money will take steps to save his business. It’s not complicated. He can either try to reduce his tax burden or go someplace with more customers.
About now, I hear that old Kingston Trio song, “Desert Pete.” It’s about a prospector debating whether to drink the jar of water left to prime an old desert pump or have confidence in the pump: “You’ve got to prime the pump; you must have faith and believe. You’ve got to give of yourself before you’re worthy to receive. Drink all the water you can hold, wash your face, cool your feet. Leave the bottle full for others. Thank You kindly, Desert Pete.”
Some lawmakers are already taking potshots at economic development incentives, and, yes, we don’t know how well they work, but they’ve been a factor in virtually every new company setting up shop in recent years.
Which brings us to that other golden goose, the film industry. People may be watching their pennies, but they’re still going to the movies. In droves.
I’ve started paying attention to film credits. For a movie set in Minnesota, “Brothers” sure had a lot of Hispanic names. Turns out it was filmed here, in Santa Fe, Los Alamos, Abiquiu, Española, Glorieta, Las Vegas, and San Juan and Zia pueblos. It employed 332 New Mexico crew members, according to Eric Witt in the Governor’s Office.
This is one impact – real people who make their living in the industry, and they number 3,000.
Recently Variety, the industry bible, ranked New Mexico the third-best place to make a film in the U.S., after California and New York. Three reasons: incentives, variety of scenery, and the largest crew base outside of the coasts.
But is the economic impact bigger than incentives?
After dueling studies on economic impacts, the Legislative Finance Committee last year churned out a study that film people found wanting — right at the time a Michigan State University study concluded that Michigan’s 40-percent tax credits for 32 film productions in 2008 generated more than $65 million in spending and created more than 2,700 jobs.
Our legislative Business and Industry Committee in 2009 tabled a repeal of film incentives following objections by not only the film industry but the New Mexico Lodging Association. Lately, the commercial real estate trade group devoted a special section of its directory to film making, which has a large appetite for all kinds of empty space.
Some 40 states now have film incentives, and many are having this discussion. Film incentives are bound to come up again here. Last year, Sen. John Arthur Smith, said, “Next year, if our economy hasn’t stabilized, we’ll grasp at every straw.”
So as they ponder the millions paid, here’s some math: New Mexico provides a 25 percent rebate to production companies. Before they can collect that 25 percent, they’ve already spent four times that amount, and it turns over in local economies.
In the coming session, as lawmakers grasp at straws, maybe somebody should hum a few lines about priming the pump.
Thank you kindly, Desert Pete.
©2010 New Mexico News Services