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November 26, 2014

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THE LEGISLATURE:

Anger left in wake of film tax bill’s demise

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Seven Ft / Special to the Sun

Crews film a scene from the foreign film “The Gambler” at the Plaza in downtown Las Vegas.

Movie bill

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Marilyn Kirkpatrick

Marilyn Kirkpatrick

Paul Aizley

Paul Aizley

To hear Jason Watkins tell it, a bill to lure movie productions here using tax incentives — and the prospects for further developing a local film industry — went down the drain because of Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas.

Watkins, who is trying to help get two movies made in Nevada, said Kirkpatrick created undue confusion over the issue by introducing a competing measure. The immediate effect, he said, is two movie companies are taking their $10 million productions elsewhere.

Kirkpatrick “will not be re-elected,” Watkins vowed. “I’ll do everything in my power to make that happen.”

However, Frank Woodbeck, a director with the Nevada Economic Development Commission, which was also working on movie incentive legislation, blames Watkins.

“I’m absolutely furious,” Woodbeck said this week. “I worked on that (bill) for 18 months ... For him to say Marilyn did this — he didn’t do a damn thing but screw up the entire thing ... He knows nothing about the business. He got in the way and now he doesn’t want to be blamed for it.”

The truth may be in the eye of the beholder.

The bill would have given movie companies tax credits that could be sold to businesses wanting to lower their tax bills. The incentives were seen as a way to maintain Nevada’s well-known status as a movie/TV-production haven at a time when other states have for years been creating incentives to lure the multimillion-dollar budgets of major movie productions.

Nevada never really needed much incentive before, though, because it enjoys a reputation as a great place to film due, in large part, to the picturesque Strip, its mobbed-up, sexed-up, anything-goes reputation, its virtual no-tax business climate and proximity to Hollywood. When stars come to Vegas, they can stay in first-class resorts.

On the flip side, movies made here benefit Nevada’s tourist-driven economy in many incalculable ways. Not only do film crews spend money and, at times, hire local talent to assist in production, but the publicity from a movie like “Ocean’s Eleven” or “The Hangover” or even the reality show “Real World” can generate enough interest among viewers to turn them into future tourists.

Too tempting to ignore, 40 states now offer film tax incentives while Nevada offers nothing.

So Watkins and others, including Assemblyman Paul Aizley, D-Las Vegas, spent more than a year working on a bill that would have offered productions a 25 percent tax credit and other incentives.

But Kirkpatrick, who has been in the legislative game longer than Aizley, introduced Assembly Bill 506, the Motion Picture Jobs Creation bill, which at first offered the same percent tax credit (though she later lowered it from 25 percent to 15 percent). Kirkpatrick is known as among the hardest-working legislators in Carson City, leading two Assembly committees, Taxation and Government Affairs, and will likely become speaker of the Assembly in 2013. As a senior and respected member of the Assembly, her bill took precedence over Aizley’s.

Watkins alleges Kirkpatrick introduced her bill for one reason: to make sure she could kill it. He believes she is so anti-tax credit, she took control of any attempt to give the film industry a tax credit simply to ensure that it failed. Watkins kept talking to legislators and union members. Eventually, he said he was told that both Gov. Brian Sandoval and Lt. Gov. Brian Krolicki supported the film tax incentive idea. Sandoval’s staff could not be reached for confirmation. Krolicki couldn’t be reached Friday, but Woodbeck acknowledged the lieutenant governor did support a tax-credit bill, though not to the degree that Watkins wanted.

Kirkpatrick admitted the bill didn’t really get much attention for a while, because lawmakers were scrambling to figure out how to put together state services during a time when the poor economy demanded either more taxes, more cutbacks or both. Reached after the session, Kirkpatrick said tax abatement bills didn’t do well during the session. “We were scraping, you know, to find even $10,000,” she said.

And the film tax bill didn’t get much attention until the end, she added, because of the focus on the budget. “We had to determine where the budget was before we could allow for any abatements,” she said.

She disagreed with Watkins and his push for a 25 percent credit, adding that she had no idea who Watkins was before this session and still “wouldn’t know who he was if he walked up to me.” Though her original bill supported 25 percent, she changed it to 15 percent, saying the state would have given away more money than it collected in taxes at the higher rate. Her enthusiasm for film incentives, she also said, was tempered by a report in June from the Tax Foundation showing some states cutting back on tax credits. The report concludes that “film tax credits fail to live up to their promises to encourage economic growth overall and to raise tax revenue.”

Noting that states gave $6 billion in film tax incentives since the 1990s, the report says eight states have recently killed or decided not to fund film tax credit programs. Nine are capping or reducing credits, or seeking to eliminate them altogether.

Some states, however, are adding to the mix. Utah expanded its credit program; Virginia added a film tax credit and Wyoming extended its program.

Click to enlarge photo

"The Hangover" actors, from left, Zach Galifianakis, Bradley Cooper, Ed Helms and Justin Bartha, appear in a scene at Caesars Palace's reception area.

Reports also exist trumpeting the success of film tax credits. Watkins cited one from Louisiana. The report doesn’t demonstrate an immediate one-to-one payback — a $1 million tax credit, for instance, doesn’t immediately reap $1 million in tax collections. But the state’s 30 percent incentive is creating a film industry infrastructure, the report says, so that “services that once had to be performed in Los Angeles can now be secured in Shreveport.”

That’s the long-term positive jobs growth Watkins envisioned for Nevada.

Kirkpatrick said she wants that too — and it might have begun if not for Watkins’ “rogue” amendment.

Days after the session, Watkins pulled out a color photocopy of his version of AB506. It changed Kirkpatrick’s bill in small but important ways. For instance, it gave the governor the right to increase incentives to 25 percent, when Kirkpatrick wanted it limited to 15 percent. It also created an advisory council, which Kirkpatrick saw as an unnecessary layer of bureaucracy.

Here’s where things get murky. Watkins thought his version would be cast aside, having been told Kirkpatrick would kill any version but her own. So he was astonished on Memorial Day when members of the Ways and Means Committee were talking about his version of AB506, not Kirkpatrick’s. “Somehow my amendment got into their hands,” and Watkins thought it might get passed because no one realized it wasn’t Kirkpatrick’s.

The committee stopped debate, however, because his version included per-diem payments to advisory council members. That means money. So they wanted Woodbeck’s agency to figure out how much it would cost.

That moved the bill out of the committee’s hands. The Legislature continued at breakneck speed, as it does the last week of every session. The bill never came back. It died.

When Kirkpatrick realized what happened, Dan’l Cook, president of the International Alliance of Theatrical Stage Employees Local 720, said he watched her “shake” with anger.

“I thought we were golden” with AB506, said Cook, whose union has about 1,675 members. “It was a jaw-dropper to sit and watch that whole thing get tanked.”

He added his union had nothing to do with Watkins’ efforts, although he appreciated Watkins’ amendment because of the larger tax incentive. That said, Cook would have been more than happy to see Kirkpatrick’s bill become law, then “played with it later” in the future.

Now, he said, it will be at least two years, until the next legislative session, before the incentives will be reconsidered.

Watkins, meanwhile, blames Kirkpatrick, figuring she had put the whole fiasco into motion by somehow making sure his version, not hers, got to Ways and Means. She knew, he says in hindsight, that the committee would figure it out and the bill would die for lack of time.

He’s vowed to oppose her re-election.

“Bring it,” Kirkpatrick said.

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  1. Good for Marilyn. She represents my district and I'm glad she flushed this tax credit down the toilet. I hope she does the same with any scheme to get taxpayers to foot any portion of private enterprises investment in any projects. Why should one industry be favored over another with taxpayer money? Who decides that and who benefits? Politicians who can wrangle "contributions" from favored companies and industries and scummy lobbyists who are part of the "good-old-boy" network, that's who. If Watkins wants to make movies, let him do it on his own dime or get enough investors to pay for it.

  2. Man? We have used our "no tax" catch phrase for far too many years. We have examples of what works, i.e. Texas, to attract and keep new business. I think it has something to do with incentives to get them here. The money they produce rolls so many times over in a local economy, it is amazing. That said, when they realize how much the "fees and regulation costs" are, it is hard to do it twice.

    Many go to Canada...now some one says France. Last I checked, if it is so nice there, go, and while you are there, check out their defense budget, their foreign aid budget, their contributions to NATO. I am tired of the short sighted, one or two word phrases about other countries...Greece was at the fore front. California tries to lead. Can you say bankrupt or over taxed?

    My dad is 87, he refuses new teeth, even if I paid for them. There is nothing wrong with his smile, and I would like to know why you think Mining and Casinos should even think of putting teeth in our Seniors. Many of them could just give up their "Player Cards" and get teeth.

  3. Dental & vision coverage is available through Medicare. My wife & I both are covered. We pay a little extra every month for the optional coverage but that was our choice.

  4. So if she says there are all these studies that say the tax credits don't live up to expectation then why did she produce her own bill????

    Interesting that now both bills failed she has gone into spin control mode and is saying it wouldn't have helped anyways.

  5. I love how people think!
    A. "Kill the tax incentives" - who cares that they would bring tens of millions of dollars in business that will go to another place without the offset.
    B. Ramp up spending on more social benefits!

    So, "kill revenue and increase spending". What a plan for Nevada!

  6. Chunky says:

    Local 720 has no jurisdiction and little to nothing to do with motion pictures and broadcast television and few members of 720 have any knowledge or experience working on them. However, the union leadership, specifically Tony Gennarelli has worked hard to get a piece of the pie.

    This was a unique legislative session with a host of larger issues at stake. A simple mis-step like this is all it takes.

    Sadly, a lot of good people including Mr. JR Reid and Mr. Cohen put a ton of effort into it.

    The next two years need to be spent educating our legislators and also educating our local production crews to get their skill sets and work ethics on-par with LA and NY production teams. The lack of tax incentives is not the only reason Producers take their work elsewhere; few of them will try local Vegas crews more than once due to the general lack of skills and work ethic.

    Chunky doesn't mean to paint such a broad stroke as there are a handful of very talented and capable production professionals here but those are few and far between. It would be a stretch to say Vegas has more than 3-4 people per department / job class that can work at the highest levels; definitely not enough to crew an entire film or production.

    That's what Chunky thinks! He also still thinks that's a great photo by Mr. Sauer; one of the true production pros we do have.

  7. This discrepancy does need to be addressed, blame assigned and people held accountable. I'm hearing lots of contradictory information on those involved in the process.

    Regardless, we have to move forward and get this done at next session. The question is how to start/beginning planning now. Real people are hurting in this economy -- real people, not numbers on a spreadsheet or mere statistics.

    The bill needs to be written so that as many people benefit as possible, not just a chosen few -- or one company, no matter how small the print.

  8. The tax incentive bill failure is definitely not the only problem with the film industry here. We are too close to LA and we are a 'Right to Work State. Our unions hands are tied, unless we empower them they can only do what their members will help them to do. They represent us and we have to help them by standing beside all union members in support of anything that gets crew trained and working here. The international IATSE which governs over the local 720 IATSE has a pre-existing and long standing relationship with LA and NY so when major film/TV productions and developers come to Vegas they tend to bring in many many outside people. If you take that into account along with the
    80% drop in production in the last few years due to out of state incentives offered, you end up with a very negative situation. A large group of guys I have worked with for many years here have moved on because they lost everything and had to take their skill to states with incentives and a stronger production infrastructure.
    This is an extremely transient town and the film business is a lot like a carnival anyway. They come here in big caravans of trucks, rent out a bunch of hotel rooms, set up a large camp of motorhomes, equipment and camera trucks, wardrobe trucks, fuelers, generators and even camera cranes and helicopters. They find a bunch of picturesque spots to film, generally on the strip and create several days to several weeks of work and/or entertainment for the locals and tourists alike. They dump millions into the local economy and move on. The lucky few of us that get to work the jobs cannot survive the way it is going. We need to help the union take control of the incoming productions and stop allowing all the first year grads of UNLV (no offense we all started somewhere) or out of town crew guys to keep taking work from local experienced stagehands and making us look bad. I am not all pro union, I have had my share of the imperfect situations in our local but without them we would all kill and each other, figuratively speaking of course. They are ultimately here to help us keep the production companies honest and create a fair wage based environment so the guys that consistently take advantage of others for personal financial gain cannot get a foot hold. The union agents have been working tirelessly and behind the scenes to make this work for us all, not just a privileged few with their very large hands in the pot.
    This tax incentive would have brought a much larger portion of the production work here and would have made way for a much stronger film community. It was a great idea, then it jumped off a building. Probably because of the heat.

  9. I don't know what kind of "full time" jobs the film industry would bring here, nor how much would be shot here, considering most are done in CA, NY or Vancouver. What I do know is that we need more companies coming here like Foliot, which opened this year (or was scheduled to in May) with 200 new jobs. There was another one this year as well, though I don't recall it.

    It seems to me that I'd far prefer businesses that are here to stay, add full time jobs and contribute regularly to the community than pop in and out.