Nevada film credit expansion backers still confident despite critical reports

Backers of the two bills to significantly expand Nevada's film tax credits remain confident in their proposals even after recent state-commissioned reports cast doubt on their likelihood of being financially sustainable.
In correspondence shared with The Nevada Independent, Sen. Roberta Lange (D-Las Vegas) criticized an independent report commissioned by the Governor's Office of Economic Development (GOED), saying the analysis of her bill ( SB220 ) had 'flawed and misleading conclusions.'
Meanwhile, the proponents of the bill sponsored by Assm. Sandra Jauregui (D-Las Vegas) and led by Sony Pictures and Warner Bros. Discovery ( AB238 ) did not push back against the report's findings, but provided additional context as to why the third-party analysis differed from their own fiscal estimates.
The responses reflect the confidence that each side has in their own proposals heading into the home stretch of the legislative session. Given the state's precarious financial situation, legislators are skeptical about whether the projected economic benefits are enough to offset the massive tax credit expansion.
Lange has proposed a merger of the two proposals that would decrease each project's allocation of film tax credits but increase the overall price tag to about $2.2 billion over 18 years, The Indy reported Wednesday.
The GOED-commissioned reports, first reported by The Indy and conducted by the Arizona-based firm Applied Economics, cast doubt on both proposals' long-term economic viability. Though they expected a significant economic return on investment — meaning ripple effects in the economy of (which they acknowledged was difficult to predict), the analyses estimated that the amount of recouped direct tax revenue would fall far short of breaking even with how many tax credits were invested.
In other words, the bills could benefit the economy at large even though they would bring a negative return on investment when looking at just the public funds involved.
But is that deterring the lawmakers who may soon decide the idea's fate?
Several prominent legislators — including Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) and Senate Finance Chair Marilyn Dondero Loop (D-Las Vegas) — told The Nevada Independent on Tuesday that they were still assessing the proposals. Jauregui and Assembly budget chair Assm. Daniele Monroe-Moreno (D-North Las Vegas), the two primary sponsors for the bill backed by Sony and Warner Bros, said Tuesday they had not read the state's report.
However, Assm. Brian Hibbetts (R-Las Vegas), one of several members to vote the Sony-backed bill out of committee while reserving his right to change his vote on the floor, said while he had not read the full report, the initial reporting 'does not bode well, in my opinion, for either one of those measures.'
Progressives have pushed back on the film tax credit measure, with the Executive Director of Battle Born Progress Shelbie Swartz saying that the analyses from the Governor's Office of Economic Development prove that expanding film tax credits is unsustainable.
'These tax credits are and always have been an unprecedented corporate handout,' Swartz said. 'Now, lawmakers and Nevadans everywhere deserve transparency and the full release of this analysis to see just how bad this deal really is.'
Lange's bill
The state-issued report brought particularly negative news for Lange's bill, which has not yet received a hearing in a pivotal money committee. Her proposal calls for $1.6 billion in film tax credits across an 18-year period (the current film tax credit program would instead set aside $180 million during that same time frame) and the creation of a nonprofit supporting a UNLV-affiliated research center.
The independent report's estimate of state and local tax revenues on Lange's proposal came in 341 percent and 169 percent lower, respectively, than the analysis by the firm hired by Birtcher Development and other backers. It acknowledged that these differences were likely attributable to differences in modeling and methodology.
The analysis also expected a significant decrease in the fiscal (taxpayer dollar) return on investment in Lange's bill.
In a response shared with The Nevada Independent, Lange pushed back on the independent report's economic impact model, which is based on historical assumptions and is one that the state frequently uses for economic analyses. When the bill's proponents commissioned an economic analysis, it relied on a model that used real-time market data, she said.
'While we welcome analytical rigor, we reject the suggestion that historical assumptions from unrelated employment categories should dictate future opportunity for Nevada and its citizens,' Lange said in her response.
Lange said that the analysis 'grossly understates the job creation and income effects for local workers' by expecting that 25 percent of the jobs created would be sourced locally, while proponents project that number to actually be 75 percent. That delineation is not specifically outlined in the report.
Lange also criticized the report for not addressing a three-year ramp-up period, which she said in an interview would have increased the estimated job and revenue numbers. Her bill's proponents also said they believe the report mischaracterized the kinds of jobs that would be created under the project, which resulted in lowballing estimated wage numbers.
And she criticized the report for doubting the verifiability of tourism related to film production 'despite strong industry precedent and recent global benchmarking studies,' citing a study on Nevada's film tax credits conducted last year.
Sony, Warner Bros. bill
AB238, sponsored by Jauregui, proposes appropriating $95 million in annual transferable film tax credits for 15 years beginning in 2028, an 850 percent increase from the amount that would be set aside under the state's existing film tax credit program.
An amended version would also create a special entertainment district to funnel revenue from certain local taxes related to the film production toward the Clark County School District (CCSD) to build up pre-K programs. There are different estimates on how many pre-K seats it would fill, ranging from 2 percent to 5 percent of current need.
The independent report on Jauregui's bill showed a fiscal return on investment ($0.52 for every dollar invested) higher than what proponents of the measure projected ($0.46 for every dollar). However, the independent analysis stated that this 'does not ensure that sufficient new tax revenue will be generated for this type of incentive to be sustainable.'
In response to the report, proponents of Jauregui's bill told The Indy that although the analysis expected slightly lower economic return across the 15-year period, this was likely because of different types of calculations, such as the monetary amount of sales per square foot of land.
Supporters also acknowledged that their own report might have been 'overly conservative' on sales and use taxes related to construction that 'may warrant future reevaluation.'
___
This story was originally published by The Nevada Independent and distributed through a partnership with The Associated Press.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

21 minutes ago

• Yahoo

Wolfspeed reaches agreement with creditors, plans bankruptcy filing

(Reuters) -Wolfspeed said on Sunday that it has reached a restructuring agreement with creditors and plans to file for bankruptcy in the U.S. in the near future. The restructuring agreement would provide the struggling chipmaker with $275 million in fresh financing by some of its existing creditors, the company said in its statement.

CNN

31 minutes ago

• CNN

UN Nuclear Chief on Damage to Iran's Nuclear Sites - Fareed Zakaria GPS - Podcast on CNN Audio

UN Nuclear Chief on Damage to Iran's Nuclear Sites Fareed Zakaria GPS 43 mins Today on the program, the US entered the conflict between Israel and Iran by striking three of its key nuclear sites. Fareed speaks with head of the International Atomic Energy Agency Rafael Grossi about the damage caused by the attack. Then, why did President Trump decide to enter the conflict? Fareed speaks to CFR President Emeritus Richard Haas and retired Admiral James Stavridis. Finally, how are leaders in Iran and Israel changing their strategies moving forward and will these strikes usher in a new era in the Middle East? Fareed is joined by Johns Hopkins' Vali Nasr and Columbia University's Nadav Eyal. GUESTS: Rafael Grossi (@rafaelmgrossi), James Stavridis (@stavridisj), Richard Haass (@RichardHaass), Vali Nasr (@vali_nasr), Nadav Eyal (@Nadav_Eyal)

CNN

31 minutes ago

• CNN

Israeli President Isaac Herzog, Dem. Sen. Adam Schiff and Former Trump National Security Adviser John Bolton - State of the Union with Jake Tapper and Dana Bash - Podcast on CNN Audio

Israeli President Isaac Herzog, Dem. Sen. Adam Schiff and Former Trump National Security Adviser John Bolton State of the Union 44 mins On CNN's State of the Union, Kasie Hunt speaks to Israeli President Isaac Herzog about the aftermath of the U.S. strikes against Iranian nuclear sites. Democratic Senator Adam Schiff speaks about the congressional response to President Trump's order to strike Iran arguing the action was "not constitutional." And Trump's former National Security Adviser says the Iran regime "is in trouble." Finally Joel Rubin, Scott Jennings, Xochitl Hinojosa and Rebecca Heinrichs discuss.