Since the administration of former Governor Bill Richardson, New Mexico has been known for its generous film subsidies. The Rio Grande Foundation has consistently opposed these subsidies, which initially included a 25% refundable tax credit for filming in the state. Former Governor Susana Martinez attempted to limit the program by capping annual spending on film subsidies at $50 million.
When Governor Michelle Lujan Grisham took office, she addressed accumulated debts estimated at $300 million and expanded the subsidies to cover up to 40% of filming costs. This expansion was supported by revenues from the oil and gas industry, making film the most subsidized sector in New Mexico.
However, the broader film industry is now experiencing a downturn. Spending by companies filming in New Mexico dropped from $740 million annually to $323 million between July 2024 and June 2025. Industry insiders suggest this decline may be permanent due to economic pressures and changing consumer preferences.
This situation presents a mixed outcome for New Mexico. Studies have shown that the state's film subsidy programs are not economically beneficial. In 2023, analysts from the Legislative Finance Committee reported that "film incentives are less effective at attracting private investment, cost more per job, and have a lower return on investment than other incentive programs."
The case of Santa Fe Studios illustrates how deeply embedded subsidies are in New Mexico's film industry. Open since 2011, the studios received significant financial support beyond the state's 40% credit, including a $10 million grant from the state and additional funding from Santa Fe County.
New Mexico continues to invest in film-related initiatives such as the Next Generation Media Academy and other programs under the Local Economic Development Act.
There is a lesson here for policymakers: instead of focusing on specific industries with subsidies, it might be more beneficial to reduce tax burdens across all businesses through tax cuts and reforms. Improving education systems to foster critical thinking skills rather than training students for one industry could also help make New Mexico an attractive place for diverse businesses.
Until voters demand broader economic policies that benefit all businesses rather than just favored industries, New Mexico may continue to face economic challenges.
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