Las Vegas Sun

September 24, 2023

Assembly movie bill in danger of hitting cutting room floor

Movie bill

Seven Ft / Special to the Sun

Crews shoot a television commercial in the desert outside Las Vegas.

Movie bill

Crews shoot a television commercial in the desert outside Las Vegas. Launch slideshow »

When Bruce Willis and a Hollywood crew shooting “Lay the Favorite,” a movie to be released next year, left Las Vegas a few days ago, it wasn’t because this isn’t a great place to shoot a film.

“They loved the talent we had, loved the people they worked with,” said Tony Gennarelli, business agent for the International Alliance of Theatrical Stage Employees Local 720, which boasts 1,600 members. “But Louisiana has the tax incentives; we don’t.”

Louisiana offers a 30 percent tax incentive for movies whose budget includes spending of at least $300,000 in production in the state. Another 5 percent credit applies to the payroll of state residents hired for a production.

Nevada is one of six states that offer no tax incentives to film and production companies. Only by dint of the Strip’s iconic imagery, the city’s historic mob influences and America’s fascination with the place, does Las Vegas continue to be used as the backdrop for movies.

But at a time when the state is looking for ways to bolster its sagging economy, those in the production business think Nevada could do much better.

A bill was introduced in the Assembly to carve out production incentives.

But that bill has run up against at least one powerful lawmaker’s concern that the state might pay out more to attract productions than it receives in return. The legislation — Assembly Bill 506 — is hanging by a thread.

With a big dose of caution, Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, who sits on the Ways and Means Committee, said she is working on amendments to save the bill by narrowing the scope of the tax incentives.

“I’m nervous about this, but I’m committed,” she said.

As first introduced, the bill would provide production companies with a 25 percent transferable tax credit — credit that could be transferred or sold by one company to another. Many states offer credits equal to or close to 25 percent.

Tax credits could cover expenses in Nevada and the salaries of production workers from Nevada. Gennarelli says Nevada is stocked with production-ready labor, in part because so much stage work is done in and around the Strip.

“We’re standing by willing to train, to put people out there as we need them,” he added.

But Kirkpatrick has a problem with the numbers. At 25 percent, she said the state would likely be paying out more than it collects in taxes. The state would also have to hire two people and use the time of current state employees just to audit financial records of film companies. A fiscal note attached to the original bill estimated that cost at $1 million.

Kirkpatrick’s confidence isn’t helped by the fact that some states are pulling back on production incentives over concerns they are losing tax revenues.

Michigan, for instance, pays out 40 cents for every $1 spent by production companies under that state’s tax incentive. Over three years, the state paid out $117 million, almost $40 million a year. This year, however, lawmakers there are considering a bill to cap annual payouts at $25 million.

New Jersey suspended its incentives of 20 percent last July. New Mexico, where much of the recently released movie “Thor” was filmed, has a 25 percent tax incentive that paid out $66 million last year and $77 million in 2009. That state’s new governor wants to cap the incentive total at $50 million per year.

Adding further doubt is a November report by the Washington-based Center on Budget and Policy Priorities, a nonpartisan, nonprofit policy group, that said tax credits cost states $1.5 billion in 2009. The group called the incentives “a wasteful, ineffective and unfair instrument of economic development.”

With that in mind, Kirkpatrick is looking to lower the incentive to about 10 percent, tweak the language to make sure salary incentives are applied only to employees based in Nevada.

Some, however, don’t think 10 percent would be enough.

Jason Watkins is a consultant working with Assemblyman Paul Aizley, D-Las Vegas, on an amendment that might be introduced this week. The amendment would maintain the 25 percent incentive and add another 5 percent on wages paid to someone in a qualified Nevada training program. It would eliminate the $1 million fiscal note by forcing production companies to hire a certified public accountant to audit production expenses.

In addition, although it keeps the tax incentive for in-state workers, it would allow a 25 percent tax break up to $1 million for a movie star’s salary, but that could go higher if the star becomes a state resident, does two fundraisers for Nevada schools and agrees to make two appearances at a Nevada club or gaming facility to raise money for the Nevada Motion Pictures Commission, which would be created by the amendment.

Watkins said he represents two companies each holding off on $10 million productions — one a movie to be called “Lido,” starring Mickey Rourke,

Laurence Fishburne and Jeff Speakman, and is expected to employ at least 200 Nevada workers — until they see if Nevada lawmakers adopt the incentives.

The amendment would also require the employ of local constables for set security.

“It’s a win-win,” says Gennarelli of the 25 percent incentive plan. “It would put money in the state’s coffers and create jobs. How can anyone oppose that?”

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