Film Industry Downturn Hits New Mexico: An Opinion Piece

Film Industry Downturn Hits New Mexico: An Opinion Piece

New Mexico has traditionally invested heavily in its film industry, with millions of dollars allocated through the Local Economic Development Act program. However, recent reports from the Legislature's own analysts suggest that film incentives may not be the most effective means of attracting private investment or fostering economic growth [1].

This revelation comes as studies have consistently labelled New Mexico's film subsidy programs as economic losers [2]. This decline in the film industry's performance may be the "new normal," with industry insiders questioning if the industry will regain its former glory [3].

In response to these findings, policymakers are urged to consider alternative economic policies that could benefit all businesses in New Mexico. Instead of focusing on favored industries like film subsidies, alternative policies like broad-based incentives and targeted support programs could foster diverse economic growth across sectors.

One such policy is the Technology and Innovation Grants. New Mexico’s Quantum Technology Award Pilot Program, for example, provides competitive state-funded grants to early-stage quantum technology companies, encouraging innovation and business expansion in a cutting-edge field [2]. Similar programs can be designed for a wider range of emerging industries to spur broad economic development.

General Business Tax Incentives are another approach. Adopting tax credits or deductions that apply to all businesses based on investment in infrastructure, R&D, or workforce development encourages growth across sectors without favoritism [4].

Support for Small and Medium Enterprises (SMEs) is also crucial. Programs that improve access to capital—like expanded Small Business Administration loans or business lines of credit—can help diverse businesses manage cash flow, hire workers, and scale sustainably [4].

Workforce Development and Education are key elements in this strategy. Expanding scholarship programs and workforce training create a more skilled workforce that benefits all industries [2].

Infrastructure and Digital Economy Investments are also vital. States across the U.S. are increasingly incentivizing the construction of data centers and digital infrastructure, fueling economic growth in the digital sector, which benefits multiple industries and can attract varied business types [1].

Gov. Michelle Lujan Grisham, in an effort to address these concerns, has paid out an estimated $300 million in accumulated film subsidy debts and expanded the subsidies to cover up to 40% of filming costs [5]. However, the amount spent by companies filming in New Mexico has fallen from $740 million annually to $323 million from July 2024 to June 2025 [6].

As the focus shifts towards broad-based economic growth, New Mexico's political classes are urged to reduce tax burdens and implement tax cuts and gross receipts tax reforms for all businesses [7]. Until voters demand better economic policies for all businesses, New Mexico is likely to continue underachieving as a state [8].

Improving the education system to train students to be critical and innovative thinkers, rather than for one industry, is also recommended [9]. Santa Fe Studios, for instance, received a $10 million grant from the state, and Santa Fe County contributed another $3.6 million for infrastructure improvements [10]. However, Santa Fe Studios was exempted from property taxes through a $22 million Industrial Revenue Bond (IRB) [11].

The Rio Grande Foundation has opposed New Mexico's film subsidies since Gov. Bill Richardson's administration [12]. New Mexico's film industry has been the state's most subsidized industry for a long time [13]. As the state moves towards a more balanced economic approach, New Mexico should aim to be an attractive place for all businesses, not just a selected few.

References:

1. Data Centers and Economic Development
2. New Mexico’s Quantum Technology Award Pilot Program
3. New Mexico's Film Incentives Cost More, Yield Less
4. Small Business Administration
5. NM Film Office Pays Down $300 Million in Accumulated Debt
6. NM Film Industry Spending Plummets
7. New Mexico Tax Policy
8. New Mexico's Economic Underachievement
9. Improving New Mexico's Education System
10. Santa Fe Studios Gets $13.6 Million
11. Santa Fe Studios Gets Property Tax Break
12. Rio Grande Foundation Opposes Film Subsidies
13. New Mexico's Most Subsidized Industry
14. To foster economic growth across various sectors in New Mexico, policymakers may consider shifting focus from industry-specific subsidies like film incentives to broader policies such as Technology and Innovation Grants, General Business Tax Incentives, or support for Small and Medium Enterprises (SMEs).
15. In order to encourage innovation and business expansion in cutting-edge fields, New Mexico could implement programs similar to the Quantum Technology Award Pilot Program, offering competitive state-funded grants to early-stage companies in emerging industries.
16. As education plays a crucial role in training a skilled workforce, it's recommended that focus be shifted from industry-specific training to developing critical and innovative thinkers through improved education systems, as exemplified by the $10 million grant given to Santa Fe Studios for infrastructure improvements.

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