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December 21, 2014

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Assembly movie bill in danger of hitting cutting room floor

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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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  1. Good Bill, people might favor New Mexico still. Sandoval is lacking in his leadership on jobs. Where is he on this issue?

  2. This sounds more like a union ready bill, more than a economic incentive bill. More government jobs (union), a tax accountant and local constables (union).

  3. Free ride for mines, taxes for movies? How does that work? What taxes?

  4. There is a pretty strong consensus among economists that movie subsidies and tax credits are worthless when it comes to economic development and costly in terms of lost revenue for the state and local governments.

  5. Nevada is an ideal location for big budget films: full of spectacle, multiple types of locations, and with a local talent base unmatched except in Hollywood. Las Vegas is so convenient to the reliable labs and support facilities in L.A. that directors can shoot here with confidence and still schedule "rushes" and count on solving problems that come up without undue delays. And because of our lower labor costs, producers can save big money. The one missing element is a tax subsidy: the 25% would do it; maybe 20% would also work because of the other advantages of our city. The pay-off in economic benefits by far outweighs any small negative implications of the tax incentive.

    As a member of the WGAw (writers guild), take it from one who knows: this is a major industry Las Vegas already has here (10-12 films a year); with this tax incentive, we can go after this industry aggressively and bring hundreds and hundreds of jobs to our city. It's the right thing to do, right for our state, and will pay-off ten-fold.

  6. I didn't see alot of reason to do this. the article only poined out costs with no projections on possible gain. I figure there is probably a reason why they left it out. That would be fine if it created a large number of quality jobs and program at least broke even...it sounds like all the jobs would be temp jobs. You would need to attract permanent industry for any real gain and i don't see that happening.

  7. The good thing about this bill is that it was researched using the other 43 states that already have a tax incentive. They then used the best parts to make this bill. It is almost impossible for us to continue without it, much less flourish in our industry again.

  8. Enough already! NO SUBSIDIES FOR ANYONE - PERIOD! Everyone seems to have their hand out for taxpayer subsidies: for trains, arenas, high-rises, low-rises; you name it and they whine and cry and say it won't happen without them. Good! Let them fail before we waste any money subsidizing them! If a project can't make it without taxpayer $, it's a worthless venture to begin with!

  9. I'd love to see some clear math of how these tax incentives "cost" money. Someone please clear this up for the rest of us? Lets start with this example...
    A $10M movie comes to Vegas that would have gone elsewhere.
    Some $$$ go to 200 jobs (lets say 60% of the budget, $6M), the rest ($4M) goes to catering, to equipment rentals, to office supplies, to gas stations, to restaurants, to shops in the malls, etc, etc.
    How much of that $10M goes to NV taxes without incentives (pretending they agreed to film here), and how much of that goes to NV if the incentives pass?

  10. Chunky says:

    The leading economic indicators of the states with tax incentives are well ahead of Nevada on most counts; maybe they know something our politicians don't!

    There is no lose to this simple bill, it can only benefit the state in dollars and advertising value.

    Maybe the film office can do some of the financial paperwork instead of mostly producing the film book which is the 1970s version of the Yellow Pages. What a waste to put that in print at all.

    That's what Chunky thinks!

  11. Why does it seem that, when a Republican suggests tax breaks as an incentive to get companies to do more business here, it's embraced as the best idea since sliced bread, but when the idea comes from a Democrat, everyone labels it as stupid and wasteful? Seems like an arbitrary double standard, on the face of it.

  12. Nevada doesnt need tax breaks to bring in movies, it will make no differance, just cost the State money.

  13. I was Bruce Willis' stand-in on this movie (LAY THE FAVORITE). On the last day of shooting in LV before they left for New Orleans, the Director and the Writer both told me they would have preferred to stay here. The ONLY reason they went to New Orleans was because New Orleans gave Film Incentives and NV did not. That means the majority of the $20 MILLION budget is now being spent elsewhere that could have been put in the pockets of the local workforce -- eg.: actors, crew, post production, catering and yes, even the almighty casino/hotels that could provide the lodging.

    Instead of 6 days of work, I could have worked the entire shoot of 32 days. This is only 1 example of the effect on 1 person in 1 film. Now extrapolate that out to all the films/tv shows that have passed us by.

    LA is ALWAYS looking for an excuse to come to LV. To be honest, i don't really feel like i've left LA, but living WAY on the outskirts of town. But they need some kind of justification to their bean counters. As Ken Howard, the National President of Screen Actors Guild told me last year, "You are DEAD without incentives."

    The numbers are there. Film Incentives have been around for enough years now that we can statistically verify the effect on the local economy. With all the lip service being paid to "we need to diversify the LV economy", here is a proven, slam-dunk win for all.

    "Make it so, Number One".

  14. The Porn stars will come here for their conventions but make their movies somewhere else, like in the San Fernando Valley, Ca., the US Capital for Porn movies.

    If low taxes brought movies, they why are so many of the Porn movies made in California, the land of high income taxes?

    It is clear there is more to the movie issues then just taxes. That is an excuse, not a reason.