Group says states giving too much to lure filming

CARSON CITY -- Unlike other cities around the country, Las Vegas is such an exciting location that Nevada does not have to offer tax incentives to get motion picture and television companies to film there.

"That's what has saved us during this incentive war," said Charles Geocaris, the director of the Nevada Film Office. "The Las Vegas Strip is part of the story."

A new Tax Foundation study found 44 states now offer Hollywood some form of incentives, up from five in 2002. This tax incentive war has become more intensive in recent years.

But Louisiana and South Carolina failed to secure enough film production spending to cover the amount in tax breaks they extended to the industry, according to the report. South Carolina's return was just 19 cents on the dollar.

In a report released ahead of last Sunday's Golden Globes awards ceremony, the Tax Foundation recommended that states stop subsidizing the film industry but acknowledged that will be difficult because politicians and the public have gone gaga over celebrities.

"Hollywood epitomizes glamour," according to the Tax Foundation, a nonprofit education research group based in Washington, D.C., that monitors taxes and government spending.

"From politicians' point of view, bringing Hollywood to town is the best of all possible photo opportunities -- not just a ribbon-cutting to announce new job creation, but a ribbon-cutting with a movie or TV star," it said.

But Geocaris said Tuesday that Nevada gives up very little to attract film and TV productions that have brought more than $100 million a year in spending by the companies for nine consecutive years.

"Our return on investment is 145-to-1," he said. "We have held very steady despite all the handouts available in other states. As long as states will hand out money, Hollywood will accept it. It is all about the money."

Nevada, which has no corporate or personal income tax, cannot offer the film companies any additional breaks beyond what any resident receives.

Film companies qualify for exemption on lodging taxes if they remain more than 30 straight days, but Geocaris said that break rarely is requested.

Nonetheless, the Tax Foundation singled out the Nevada Film Office as a "pricey venture" with seven workers and an annual budget in 2009 of more than $700,000.

"As the Nevada Film Office boasts, tax dollars are spent to save 'production hours, effort, manpower and guesswork' by scouting locations, defining and managing logistics, acting as an intergovernmental liaison and gathering resources so that filmmakers 'can stay on time and budget.'"

That is what his office does, but Geocaris contends its return on investment would be the envy of any business.

Film production companies even pay the police costs when a highway or street is closed for a film production in Las Vegas, unlike New York, he said.

Daniel Burns, the communications director for Gov. Jim Gibbons, said Nevada isn't in a position to offer tax incentives to film companies.

When Lorraine Hunt was lieutenant governor, there were discussions to exempt film company trucks from gasoline taxes, but Burns said that idea was rejected.

"Nevada already is a tax-friendly state," he said.

But Burns added that what Nevada receives from film production spending isn't the only benefit of wooing movie companies.

Las Vegas receives untold millions of dollars in free publicity from "The Hangover," "Ocean's Eleven" and TV shows such as "CSI," featuring extensive shots of the city, he said.

"The Hangover," a Las Vegas movie, won the Golden Globe award for best comedy or musical motion picture.

No one knows which state had the most films, but Las Vegas is a virtual character in its movies, he said.

"They showcase the city," Burns said. "Las Vegas is special. You cannot buy that publicity."

Despite the incentive war, Geocaris said, Nevada remains one of the top 10 film and TV production states. It probably was in the top five a few years ago, Geocaris said.

Michigan, which offers 40 percent plus grants on film companies' investments, is one of the top film production states, he said. The incentives offered in Michigan will top $150 million in 2010, according to the Tax Foundation.

Even California now offers film companies tax breaks if they decide to film in Hollywood and other Golden State locations.

But states are becoming aware that tax incentives often do not pay off. Kansas has suspended its motion picture incentives, and states such as Pennsylvania and Rhode Island placed limits and greater oversight of incentives.

Unless more states are willing to limit their expenditures to attract the money in this recession, the Tax Foundation concluded, "filmmakers will continue to enjoy the bounty while taxpayers are left with the bill."

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.