Las Vegas Sun

March 28, 2024

Plot thickens in story of state’s film tax credit program

Paul Blart: Mall Cop

Richard Cartwright / Sony Pictures / AP

Kevin James starred in “Paul Blart: Mall Cop” and its sequel, which was the first film to receive a tax break after Nevada’s 2013 legislative session.

Launched in January 2014, Nevada’s film tax credit program was designed to diversify the state economy and reduce its dependence on gaming and tourism, a goal state leaders have had for decades.

The four-year pilot program, operated by the Governor’s Office of Economic Development, offers a transferable tax credit to productions with budgets greater than $500,000 that shoot at least 60 percent of their footage in the state. Credits start at 15 percent of qualified expenses but can increase 2 percentage points if at least half the crew is made up of Nevada residents. The credit maxes out at $6 million per production.

The push to launch the program was spearheaded by Democratic Sen. Aaron Ford during the 2013 legislative session and attracted support from actor Nicolas Cage, who testified in favor of the bill.

Though the bill passed, support for it wasn’t universal. Republican Sen. Greg Brower, for example, said it was “not good tax policy” and predicted it would take money away from schools, public safety and other programs.

The first recipient was Sony Pictures’ “Paul Blart: Mall Cop 2,” which picked up $4.3 million in tax credits.

In September, however, the program was gutted when its awards cap was reduced from $80 million ($20 million per fiscal year) to $10 million total. The money taken from the film program was earmarked instead as tax breaks for electric car maker Tesla Motors to lure the company to Nevada.

What are the results so far?

In its first year, the film program helped attract nine movies and television shows to Nevada, bringing more than $69 million in spending to the state. Productions included “The Trust” starring Cage and a forthcoming Yahoo TV series, “Sin City Saints.”

“(It) is a nice chunk of change that we otherwise would not have had,” Ford said. “We’re very proud of the progress we’ve made.”

The Governor’s Office of Economic Development is expected to release a full audit of the film tax credit program in the coming weeks.

What’s happening in the Legislature

Advocates say that without more funding, the tax credit will flounder. Ford hopes to remove the program’s $10 million cap with Senate Bill 94.

“This is about diversifying Nevada’s economy,” he said. “If we’ve learned anything from the Great Recession, it’s that Nevada can’t depend on one sector or industry to stabilize the economy. Considering our proximity to Southern California, we have an opportunity to build a strong film and television production industry.”

Ford’s bill seeks to reinvigorate the program by removing administrative speed bumps and replenishing the funds stripped in September. It also proposes to create more incentives for hiring local cast and crew and would extend the film tax credit indefinitely, rather than have it sunset in four years.

A separate bill sponsored by Democratic Assemblywoman Maggie Carlton handles the financial details of the program and seeks to restore its original budget of $20 million per fiscal year.

The pros and cons

Before conversations about the program’s future can begin in earnest, lawmakers must determine the size of the state budget. Once that’s set, Ford expects a “spirited discussion” in Carson City, he said, as the program has been met with mixed support since its inception.

Opponents argue popular filming locations such as the Strip already are successful in attracting out-of-state productions. Adam Kilbourn, owner of Black Raven Films in Las Vegas, said the large studios and corporations that benefit from the program don’t need the money; they’ll come anyway. He argued the incentives actually hurt local film companies by pricing them out of the market and making it difficult to compete.

Others opposed to the program point to several states whose film tax credit programs underperformed and were nixed, including Connecticut, Idaho and Oklahoma.

But those in favor say the program still is nascent and can’t be judged fairly after its budget was stripped. Nevada’s 15 percent incentive is far less than the 20 percent to 30 percent offered in states such as Louisiana and New Mexico, but advocates say it’s a start. Though the state spending that has resulted is relatively modest, supporters say the earnings remain a boon given the program’s reduced funding.

And contrary to Kilbourn, some local filmmakers, such as Chris Ramirez of Lola Pictures, say the program draws more activity and opportunities to Nevada and has helped keep businesses afloat.

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