Nevada film studio dreams dim as reports question viability

CARSON CITY — Two new reports commissioned by the state conclude that while the two proposals to use tax credits to lure Hollywood film studios to Nevada will stimulate economic activity, neither will be able to generate enough tax revenue to pay for themselves.

The reports were prepared by Applied Economics of Phoenix and released Monday by the Governor’s Office of Economic Development. They represented an independent assessment of fiscal and economic impact estimates provided by proponents of Senate Bill 220, which would build Nevada Studios at the UNLV Harry Reid Research and Technology Park, and Assembly Bill 238, which would build the Summerlin Studios project.

Both bills have been the subject of fierce lobbying efforts from media conglomerates, labor unions and real estate partners who say the $1.6 billion expansion of the state’s film tax credit program would have an outsized economic impact.

The studies reviewed privately funded assessments of the high-profile policy proposals moving through the Nevada Legislature in the remaining days of the session.

The reports concede that both projects would directly and indirectly stimulate new economic activity, but note that the impact on state revenue fiscal impact is more modest.

“Comparing the estimated total increase in production value in the private sector to the amount of tax credits does not ensure that sufficient new tax revenue will be generated for this type of incentive to be sustainable,” one of the reports said.

Specifically, the Applied Economics report said the Nevada Studios project proposed in SB220 would generate 35 cents of state and local tax revenue for every $1 in tax credits over its 18-year period, substantially lower than project proponents’ forecasts of $1.36 per $1 of tax credits.

The Summerlin Studios project included in AB238 would generate 52 cents per $1 in tax credits over its 15-year period, according to the Applied Economics report on the project, close to the amount predicted by a report prepared by project proponents.

In both cases, the reports said the state’s share of those tax revenues would amount to 23 cents per $1 of tax credit.

Bill sponsor rejects findings

State Sen. Roberta Lange, SB220’s sponsor, attributed the differences between the bill’s study and the Economic Analysis report to the use of another economic forecast system and other modeling differences.

“SB220 is a forward-facing proposal aimed at building a next-generation economic base in Nevada,” Lange wrote in an open letter defending her consultants’ report. “That goal requires modeling tools that reflect modern labor dynamics and the real earning potential of creative technology industries. While we welcome analytical rigor, we reject the suggestion that historical assumptions from unrelated employment categories should dictate future opportunities for Nevada and its citizens.”

AB238’s co-sponsor Sandra Jauregui, D-Las Vegas, did not respond to a request for comment by publication time.

“Governor Lombardo will evaluate all legislation that reaches his desk,” Elizabeth Ray, spokesperson for Gov. Joe Lombardo, said Tuesday afternoon.

The independent reports come days after the Assembly Ways and Means Committee voted the Sony Pictures Entertainment and Warner Bros. Discovery-backed AB238 out of committee in a Saturday afternoon hearing. Jauregui proposed conceptual amendments to the so-called Summerlin Studios project that add financial safeguards and establish a special assessment district on the studio and campus land to support pre-K expansion at the Clark County School District.

But some lawmakers on the panel said they were torn between acting conservatively in the interest of the state’s precarious economic outlook and the economic development benefits.

Progressive groups called on lawmakers to reject the film tax credit expansion proposals because of the fiscal impact on the state. They pointed to low per-pupil funding in education compared to other states and to a recently failed measure that proposed reforming the property tax structure, Assembly Joint Resolution 1.

“This week the Legislature passed the Governor’s Education Budget with only a $2 increase in per-pupil funding and tabled AJR1 to help Pass The Plan to fund public education,” Dawn Etcheverry, president of the Nevada State Education Association, said in a statement. “Now, lawmakers are considering giving away $1.65 billion in public money to Hollywood executives. It sounds like a horror movie, but it’s a Nevada documentary.”

This story has been corrected to report that tax credits are being proposed to lure film studios to Nevada.

Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.