New Mexico is perhaps best known for its film tax credit, which costs the state over $100 million a year, and for the ubiquity of Industrial Revenue Bond projects – the financing arrangement where a tax-exempt entity holds the title to a property acquired on bonds and leases it to a private corporation in exchange for payments on the bonds in lieu of taxes, which also reduce local and state taxes by an unknown amount (Intel received around $2 billion under this program).
Recipients and job creation outcomes for the Job Training Incentive Program and several other programs are disclosed quarterly by the Economic Development Department. However, project recipients of the film incentive program—likely the costliest—are not disclosed. This is particularly troubling given the vast research that exists showing how ineffective film subsidies are for boosting local economies or creating jobs.
The state caps film subsidies at $110 million per year, but exempted are companies defined as a “New Mexico film partner” (defined as having a 10-year lease on a production facility). This has been called the “Netflix loophole,” because the company could get as much as $300 million, on top of other types of subsidies – including the ones as part of the Mesa del Sol Tax Increment Development District (TIDD).
Not only are New Mexico’s Annual Comprehensive Financial Reports (ACFRs) difficult to find on search engines, the tax abatement disclosures in these reports exclude the state’s many as-of-right tax expenditures which do not meet Governmental Accounting Standards Board’s definition of “tax abatement.” These are instead found in the biennial tax expenditure reports produced by the Taxation and Revenue Department, which also include short passages of evaluation findings and policy recommendations—the only source for evaluation available anywhere. Local governments in New Mexico generally report tax abatements in accordance with Statement No. 77, thanks to the extensive education and oversight demonstrated by the State Auditor.