SANTA FE, N.M. (AP) 鈥� Producers of the western movie 鈥淩ust鈥� may have to forgo a robust economic incentive as they try to sell the film to distributors and fulfill financial obligations to the immediate family of a cinematographer who was fatally shot by Alec Baldwin during rehearsal in 2021.
New Mexico tax authorities denied an application this spring by Rust Movie Productions for incentives worth as much as $1.6 million, according to documents obtained by The Associated Press. A late July deadline for producers to appeal the decision is approaching.
Meanwhile, Baldwin is scheduled to starting next week on an involuntary manslaughter charge in Halyna Hutchins' death. The lead actor and co-producer of 鈥淩ust鈥� was pointing a gun at Hutchins when it went off, killing her and wounding director Joel Souza.
Melina Spadone, an attorney representing the production company, said the film production tax incentive was going to be used to finance a between producers and Hutchins' widower and son.
鈥淭he denial of the tax credit has disrupted those financial arrangements,鈥� said Spadone, a New York- and Los Angeles-based senior counsel at Pillsbury Winthrop Shaw Pittman. She helped broker the 2022 settlement that rebooted the stalled production of 鈥淩ust鈥� in Montana with some of the original cast and crew, including Baldwin and Souza. Filming wrapped up last year.
Terms of the settlement are confidential, but producers say finishing the film was meant to honor Hutchins' artistic vision and generate money for her young son.
Court documents indicate that settlement payments are up to a year late, as attorneys for Hutchins' widower determine 鈥渘ext steps鈥� that include whether to resume wrongful death litigation or initiate new claims. Legal representatives for Matthew Hutchins did not respond to telephone and email messages seeking comment.
The prosecution of Baldwin and the film鈥檚 tax incentive application both have financial implications for New Mexico taxpayers. The Santa Fe district attorney鈥檚 office says it spent $625,000 on 鈥淩ust鈥�-related prosecution through the end of April.
The state's is among the most generous in the nation, offering a direct rebate of between 25% and 40% on an array of expenditures to entice movie projects, employment and infrastructure investments. As a percentage of the state budget, only Georgia pays out more in incentives.
It includes a one-time option to assign the payment to a financial institution. That lets producers use the rebate to underwrite production ahead of time, often layering rights to the rebate and future movie income into production loans.
Among the beneficiaries of the rebate program are the 2011 movie 鈥淐owboys and Aliens鈥� and the TV series 鈥淏etter Call Saul,鈥� a spinoff of 鈥淏reaking Bad.鈥� As for current productions, New Mexico is the backdrop for a new film starring Matthew McConaughey and America Ferrera about the rescue of students in in the town of Paradise 鈥� the most destructive in California's history.
Charlie Moore, a spokesperson for the New Mexico Taxation and Revenue Department, declined to comment specifically on the 鈥淩ust鈥� application, citing concerns about confidential taxpayer information. Applications are reviewed for a long list of accounting and claim requirements.
During a recent 12-month period, 56 film incentive applications were approved and 43 were partially or fully denied, Moore said.
Documents obtained by AP show the New Mexico Film Office issued a memo in January to 鈥淩ust鈥� that approved eligibility to apply for the tax incentive, in a process that involves accounting ledgers, vetting against outstanding debts and an on-screen closing credit to New Mexico as a filming location. Taxation officials have final say on whether expenses are eligible.
Spadone, the attorney for 鈥淩ust,鈥� said the denial of the application is 鈥渟urprising鈥� and could disrupt confidence in the tax program with a chilling effect on rebate-backed loans that propel the local film industry.
Alton Walpole, a production manager at Santa Fe-based Mountainair Films who was not involved in 鈥淩ust,鈥� said he faults the movie's creators for seemingly cutting corners on safety but officials have an obligation to review its tax credit application based on legal and accounting principles only 鈥� or risk losing major projects to other states. Movies are inherently dangerous even without firearms on set, he noted.
鈥淭hey鈥檙e going to say, 鈥榃ait, are we going to New Mexico? They could deny the rebate,鈥欌�� Walpole said. 鈥淭hey鈥檙e watching every penny.鈥�
鈥淧opular opinion? I鈥檇 say don鈥檛 give them the rebate. But legally, I think they qualified for it all,鈥� he said.
have enacted measures to implement or expand film tax incentives since 2021, while some have gone in the opposite direction and sought to and refundability of credit.
Under Democratic Gov. Michelle Lujan Grisham, New Mexico has raised annual spending caps and expanded the film tax credit amid a multibillion-dollar surplus linked to record oil and natural gas production. Film rebate payouts were $100 million in the fiscal year ending in June 2023 and are expected to rise to nearly $272 million by 2027, according to tax agency records and the Legislature's budget and accountability office.
Democratic state Sen. George Mu帽oz has criticized the incentive program and asked whether taxpayers should be responsible for unforeseen expenses.
鈥淚f we鈥檙e going to do tax credits and there鈥檚 a problem on the film or the set, do they really qualify or do they disqualify themselves?鈥� said Mu帽oz, chairman of the lead Senate budget writing committee.
鈥淩ust鈥� does not yet have a U.S. distributor as producers shop the newly completed movie at film festivals.
Morgan Lee, The Associated Press
