SANTA FE, NM — Producers of the western film “Rust” may have to forgo a robust economic incentive as they try to sell the film to distributors and meet financial obligations to the immediate family of a cinematographer who was shot to death by Alec Baldwin during rehearsal in 2021.
New Mexico tax authorities this spring denied a request from Rust Movie Productions for incentives worth up to $1.6 million, according to documents obtained by The Associated Press. The July deadline for producers to appeal the decision is approaching.
Meanwhile, Baldwin is scheduled to go to trial starting next week with a charge of involuntary manslaughter in the death of Halyna Hutchins. The “Rust” lead actor and co-producer was pointing a gun at Hutchins when she went off, killing her and injuring director Joel Souza.
Melina Spadone, a lawyer representing the producer, said that the tax incentive for film production would be used to finance a legal agreement between producers and Hutchins’ widower and son.
“The denial of the tax credit upset those financial arrangements,” said Spadone, a senior consultant at Pillsbury Winthrop Shaw Pittman, based in New York and Los Angeles. She helped broker the 2022 deal that restarted the stalled production of “Rust” in Montana with some of the original cast and crew, including Baldwin and Souza. Filming ended last year.
Terms of the deal are confidential, but producers say finishing the film was done to honor Hutchins’ artistic vision and generate money for his son.
Court documents indicate settlement payments are delayed by up to a year as attorneys for Hutchins’ widower determine “next steps” that include resuming wrongful death litigation or filing new claims. Matthew Hutchins’ legal representatives did not respond to phone and email messages seeking comment.
Baldwin’s indictment and the film’s tax incentive request have financial implications for New Mexico taxpayers. The Santa Fe district attorney’s office says it spent $625,000 on “Rust”-related prosecutions through the end of April.
The states cinema incentive program It is among the most generous in the country, offering a direct discount of between 25% and 40% on a range of expenses to attract film projects, jobs and infrastructure investment. As a percentage of the state budget, only Georgia pays more in incentives.
Includes a unique option to assign the payment to a financial institution. This allows producers to use the discount to underwrite production upfront, often transferring the discount rights and future film revenues into production loans.
Among the beneficiaries of the discount program are the 2011 film “Cowboys and Aliens” and the TV series “Better Call Saul,” a spin-off of “Breaking Bad.” In current productions, New Mexico is the setting for a new film starring Matthew McConaughey and America Ferrera about the rescue of students in a forest fire in 2018 in the city of Paradise — the most destructive in California history.
Charlie Moore, a spokesman for the New Mexico Department of Taxation and Revenue, declined to comment specifically on the “Rust” order, citing concerns about confidential taxpayer information. Applications are reviewed for a long list of accounting and claims requirements.
During a recent 12-month period, 56 movie incentive applications were approved and 43 were partially or completely denied, Moore said.
Documents obtained by the AP show that the New Mexico Film Office issued a memo in January to “Rust” that approved eligibility to apply for the tax break, in a process that involves accounting books, checking outstanding debts and a final on-screen credit for New Mexico. Mexico. Mexico as filming location. Tax authorities have the final say on whether expenses are eligible.
Spadone, the “Rust” lawyer, said the denial of the request is “surprising” and could disrupt confidence in the tax program, with a chilling effect on the rebate-backed loans that boost the local film industry.
Alton Walpole, production manager for Santa Fe-based Mountainair Films, who was not involved in “Rust,” said he blames the film’s creators for apparently skimping on security, but authorities have an obligation to review his credit application. tax based on legal and accounting issues. just principles – or risk losing big projects to other states. Movies are inherently dangerous even without firearms on set, he noted.
“They’re going to say, ‘Wait, we’re going to New Mexico? They could deny the discount,’” Walpole said. “They are watching every penny.”
“Popular opinion? I would say don’t give them the discount. But legally, I think they qualified for everything,” he said.
At least 18 states have enacted measures to implement or expand film tax incentives since 2021, while some have gone in the opposite direction and sought limit transferability and credit repayability.
Under Democratic Gov. Michelle Lujan Grisham, New Mexico has increased annual spending limits and expanded the film tax credit amid a multibillion-dollar surplus tied to record oil and natural gas production. Film rebate payments were $100 million in the fiscal year ending June 2023 and are expected to rise to nearly $272 million by 2027, according to records from the tax agency and the Legislature’s Office of Budget and Accountability .
Democratic State Senator George Muñoz criticized the incentive program and asked whether taxpayers should be responsible for unforeseen expenses.
“If we’re going to give tax credits and there’s a problem on the film or on the set, do they really qualify or disqualify?” said Muñoz, chairman of the Senate’s main budget-writing committee.
“Rust” does not yet have a distributor in the U.S., as producers shop the recently completed film at film festivals.
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