Alec Baldwin Denied Tax Incentives for 'Rust' Film in New Mexico Ahead of Manslaughter Trial

Producers of the western movie “Rust” may have to forgo a strong economic incentive as they try to sell the film to distributors and meet their financial obligations to the immediate family of a cinematographer who was fatally shot by Alec Baldwin during rehearsals in 2021.

New Mexico tax authorities last spring rejected a request by Rust Movie Productions for $1.6 million in incentives, 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 go on trial next week on involuntary manslaughter charges. Death of Halyna HutchinsThe lead actor and co-producer of “Rust” was pointing a gun at Hutchins when it exploded, killing her and injuring director Joel Souza.

Melina Spadone, a lawyer representing the production company, said the film production tax incentive would be used to finance a legal settlement between the producers and Hutchins' widower and son.

“The denial of the tax credit disrupted those financial arrangements,” said Spadone, a New York- and Los Angeles-based senior attorney at Pillsbury Winthrop Shaw Pittman. She helped negotiate the 2022 settlement that restarted the blocked production of “Rust” in Montana with some of the original cast and crew, including Baldwin and Souza. Filming is finished Last year.

The terms of the deal are confidential, but producers say completing the film was intended to honor Hutchins' artistic vision and generate money for his young son. When the deal was announced, Baldwin called it “a resolution to this tragic and painful situation.” social networks.

“Throughout this difficult process, everyone has maintained a specific desire to do what is best for Halyna’s son,” Baldwin said in the message.

Court documents indicate that settlement payments are up to a year behind schedule as attorneys for Hutchins' widower determine “next steps,” including whether resume wrongful death litigation or file new claims. Matthew Hutchins' legal representatives did not respond to phone and email messages seeking comment.

Both the Baldwin lawsuit and the film's tax incentive claim have financial implications for New Mexico taxpayers. The Santa Fe District Attorney's Office said it had spent $625,000 on “Rust”-related lawsuits through the end of April.

What You Need to Know About New Mexico Film Incentives

New Mexico’s film incentive program is one of the most generous in the country, offering a direct rebate of between 25 and 40 percent on a range of spending to encourage film projects, jobs and infrastructure investment. As a percentage of the state budget, only Georgia provides more incentives.

It includes a unique option to assign the payment to a financial institution. This allows producers to use the rebate to underwrite the production in advance, often incorporating the rights to the rebate and future film revenues into the production loans.

Recipients of the rebate program include the 2011 film “Cowboys and Aliens” and the TV series “Better Call Saul,” a spinoff 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 college students during a 2018 wildfire in the town 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” request, citing concerns about taxpayers’ confidential information. Requests are reviewed based on 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 completely denied, Moore said.

Documents obtained by the AP show that the New Mexico Film Office sent a memo to “Rust” in January approving the tax incentive application, part of a process that involves accounting records, verification of outstanding debts and on-screen end credits indicating that New Mexico is a filming location. Tax authorities have the final say on whether expenses qualify.

Spadone, the Rust attorney, said the rejection of the application is “surprising” and could disrupt confidence in the tax program with a chilling effect on the rebate-backed loans that power the local film industry.

Alton Walpole, a production manager at Santa Fe-based Mountainair Films who was not involved in “Rust,” said he blames the film's creators for apparently skimping on security But officials have an obligation to review their tax credit claims based solely on legal and accounting principles — or risk losing major projects to other states. Movies are inherently dangerous even without guns on set, he noted.

“They're going to say, 'Wait, we're going to New Mexico? They might not give us the discount,'” Walpole said. “They're watching every penny.”

“Public opinion says they should not be given a discount. But legally, I think they are entitled to it,” he said.

At least 18 states have adopted measures to implement or expand film tax incentives since 2021, while some have gone in the opposite direction and sought to limit the transferability and repayment of the 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 tied to record oil and natural gas production. Film rebates totaled $100 million for the fiscal year ending June 2023 and are expected to reach nearly $272 million by 2027, according to records from the tax agency and the Legislature’s Budget and Accountability Office.

Democratic Sen. George Muñoz criticized the incentive program and questioned whether taxpayers should be responsible for unexpected expenses.

“If we have to give tax credits and there is a problem on the film or on the set, are they really eligible or are they disqualified?” said Muñoz, chairman of the Senate’s main budget-writing committee.

“Rust” does not yet have a distributor in the United States, as the producers are showing the recently completed film at film festivals.