While the political class sees a major economic coup with the decision of NBCUniversal to set up a film and TV studio in ABQ the doubters hear a ticking time bomb that they fear could eventually blow a hole in the state budget.

Their concern focuses on the latest film and TV incentive legislation passed this year that upped the incentives handed out to movie and TV production companies from $50 million to $110 million per year. However, for companies that make a ten year commitment to film here--which Nextflix and NBCU have--there is no cap. They can keep collecting 25 to 30 percent of what it costs to produce films and TV shows no matter how much is being billed by the industry--even if their cut of the incentive pie takes the total over $110 million a year. How much over? Well, uncapped means that--no cap is no limit. And that's a big red flag for the critics.

"Uncapped" incentives have gotten other states in trouble. Here's a Senior Alligator with special expertise who analyzes what's really going on:

Joe, the latest film incentive bill was written by Netflix for Netflix. It also applies to NBCUniversal and pretty soon Paramount which is investing in Santa Fe Studios. Amazon and Facebook are also getting into producing original content, possibly in NM. This is totally out of control. To top it all Netflix and NBCU made themselves their own “pass through" companies which means that everything they do is now rebatable whether it was procured here or out of state.

For example, why would NBC not just buy the ABQ building they are going to use for its studio from the Garcia family? Because if they rent that building they get 30% of the rent back from the state. And between the city and the state they are getting $7 million to fix up the property which is probably more than it's worth.

Question for your readers: What’s the annual film incentive payout that will cause pushback from state legislators? For Gov. Richardson it was $100 million and then Gov. Martinez came in and got a rollback. In Louisiana it was $250 million that caused them to put on the brakes. In Georgia, whose incentives are at $800 million, I’m guessing the pushback number is $1 billion.

Put me down for $400 million for New Mexico or 6% of the entire state budget. And it appears that it will hit that much in just 2022. I believe in film incentives because they benefit New Mexicans but this is just a corporate raid on our treasury.

State Senate Finance Committee Chairman John Arthur Smith, a Democrat, has already expressed his skepticism about the incentives, saying studies show that the state does not come close to recouping the money that subsidizes the industry. Still, the legislature approved not only the uncapped incentives but over $200 million to be paid out over 16 months to help pay down the huge backlog in film subsidies already approved. The total backlog is expected to hit nearly $400 million by the end of this year.

Hobbs GOP state Rep. Larry Scott and other rural lawmakers that don't benefit as much from the program as the ABQ metro questions the entire basis of the program:

Is that the economic development we want to foster in this state – if it’s the kind of economic development we have to bribe to stay here?

Most critics don't go that far, but they do say New Mexico clearly is going too far into the tank for Hollywood and will eventually learn the same hard lesson other states have.

Corporate welfare or a great economic driver? That's still an unanswered question as the giants of Hollywood are welcomed here by the fans and the state waving blank checks at them.

The WSJ has more on NM's controversial incentive program.

THE BOTTOM LINES

Last week we blogged the incorrect day for President Trump's re-election announcement. It is Tuesday--tomorrow. And that's when local Republicans will hold a watch party for the event at GOP headquarters in ABQ.

This is the home of New Mexico politics.

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(c)NM POLITICS WITH JOE MONAHAN 2019