Producers of the Alec Baldwin-starrer Rust have been having a challenging time shopping the film to distributors due to the death of the movie’s cinematographer Halyna Hutchins who was fatally shot by the actor during a rehearsal in 2021, according to The Hollywood Reporter.

Only two things are certain…

Alec Baldwin with Rust poster.

Now they’re going to have to do without New Mexico’s approximately $1.6 million economic incentives since the state’s tax authorities denied Rust Movie Productions’ application, as stated in the documents acquired by the Associated Press. The producers have until late July to appeal the decision.

In the meantime, Baldwin is scheduled to go on trial beginning next week for involuntary manslaughter in Hutchins’ death. The actor, who served as both lead and co-producer of the film pointed a gun at the cinematographer during rehearsal. The gun went off, which killed her and wounded director Joel Souza.

Rust’s lawyer Melina Spadone said that they were counting on the state’s tax incentive for the legal settlement to be paid out to Hutchins’ son and her widower, Matthew.

“The denial of the tax credit has disrupted those financial arrangements,” Spadone stated. She also helped negotiate the 2022 settlement which allowed Rust to restart their production in Montana, with some of the original cast and crew, which included Baldwin and Souza. Production was wrapped last year.

The terms of the settlement are confidential. However, the producers said the they finished the film to honor Hutchins’ artistic vision as well as provide money for her son.

The court documents state that the settlement payments have been late for almost a year. Matthew Hutchins’ lawyer is currently determining the next steps to take. One of those could be resume his wrongful death lawsuit against the production. Hutchins’ lawyers did not respond to requests seeking comment.

States and film incentives programs

Baldwin’s case and Rust’s tax incentive application financially impact New Mexico taxpayers. The Santa Fe district attorney’s office noted that the state spent $625,000 prosecuting Rust-related cases though April.

New Mexico’s film incentives program is the second most generous in the US. The program offers a direct rebate of 25% to 40% in order to attract movie projects as well as employment and infrastructure investments. Going by the percentage of the state’s budget, Georgia is the only other state who gives more incentives.

The film incentives from Mexico includes a one-time option for producers to assign the state’s payment to a financial institution. This allows the producers to use the rebate and underwrite the production with that. Production companies often layer rights to the rebate as well as the film’s projected income when they take out loans.

Some of the beneficiaries of this program are the 2011 film Cowboys and Aliens and Breaking Bad’s spinoff series Better Call Saul. Currently, New Mexico will host an upcoming film The Lost Bus, starring Matthew McConaughey and America Ferrara, which follows the rescue of a group of students who were rescued during a 2018 wildfire in Paradise, California.

Is it really a surprise?

New Mexico Taxation and Revenue Department spokesperson Charlie Moore refused to comment specifically on the Rust Movie Production application. However, he did say that in the most recent 12-month period, there have been 43 film incentives applications that have been fully or partially denied.

In January, the Rust was issued a memo by the New Mexico Film Office, approving their eligibility to apply for the program. However, taxation officials have the final decision on whether expenses applied for are eligible.

Spadone noted that the application’s denial is “surprising,” and that it could lower the confidence in the state’s tax program.

I think what’s surprising is that the production company and their lawyer are surprised at the outcome. Rust has had bad publicity surrounding it since the Hutchins’ death. The armorer, Hannah Gutierrez-Reed, who loaded the gun Baldwin fired was found guilty of involuntary manslaughter in March. Next week, the actor will have to go to court to fight the same charges.

It’s logical that New Mexico has denied the financial incentives application when a member of the production having been found guilty of a crime. Its most high-profile member is awaiting trial for the same charges as well.

Rust’s production company can still appeal the decision, but it’s not a good look with lawsuits still pending. However, it’s a no-win situation for them since they do need the money to pay out the settlement to Hutchins’ family. And with no studios or film distribution firms interested in the film, the producers may have to look elsewhere.