VICTOR JOECKS: Why the film tax credit legislation failed

What just happened in Carson City was as improbable as David defeating Goliath without a slingshot.

Late Wednesday night, the Nevada Senate voted down the Hollywood handouts contained in Assembly Bill 5. The legislation needed 11 votes to pass. It received only 10. Eight opposed it, and three senators had already left town. Talk about voting with your feet.

The proposal would have expanded Nevada’s transferable film tax credits from $10 million annually to $1.8 billion over 15 years. Transferable film tax credits are a de facto subsidy because they can be sold for cash instead of allowing recipients to simply reduce their tax bill.

The Howard Hughes Corp., Sony Pictures and Warner Bros. sought those subsidies for their proposed Summerlin Studios project. Proponents promised the giveaway would create more than 15,000 permanent jobs and 19,000 construction jobs.

This sounds good in theory. That’s why dozens of states have enacted similar programs. But they haven’t had a happy ending. State after state after state has found these schemes are money losers. Some states have imposed caps on costs. Michigan and Florida even eliminated their programs.

But proponents didn’t think they would need to make the fiscal math work. They were depending on raw political power. It’s rare for Nevada politicians to stand up to billion-dollar corporations promising to bring jobs to the state. The top Democrats in the Assembly and Senate supported it, too.

Trade unions strongly backed the proposal and promised a well-funded campaign to promote it. By steering some funding toward pre-K, supporters gained the backing of the Clark County Education Association. UNLV President Chris Heavey supported the project, writing that it would enrich “workforce development opportunities.”

The final piece of the puzzle — or so they thought — was getting Republican Gov. Joe Lombardo on board. After expressing skepticism about this proposal in February, Lombardo flipped. He started talking about it as a “jobs” bill. Then, he put Hollywood handouts on the special session agenda.

When Nevada’s political power brokers align like this, they simply don’t lose — even when the project is a dud. In 2015, lawmakers shoveled more than $200 million in incentives to Faraday Future. The electric vehicle company later pulled out of Nevada and has faced significant financial problems. Earlier that year, many of these same forces pushed through the largest tax increase in Nevada history — with Republicans holding a governing trifecta.

But that didn’t happen this time.

As they learned about the size of the giveaway, the public responded with outrage. Both conservative and liberal groups opposed the bill. Through calls, testimony and social media, grassroots activists from all sides of the political aisle made their opposition clear.

Despite Lombardo’s behind-the-scenes lobbying efforts, most legislative Republicans opposed the bill. In their floor speeches, Democratic legislators hinted at the brazen nature of the promises and threats they received from the bill’s supporters.

It takes an immense amount of courage to resist powerful special interests. And in a plot twist that could come straight from a Hollywood thriller, enough of Nevada’s elected officials did just that.

Contact Victor Joecks at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.