Nevada unions push for Hollywood tax credits in special session

By Brittany Sheehan  

Nevada News and Views

Governor Joe Lombardo is planning to call Nevada lawmakers back to Carson City for a special session. What’s on the menu? A Hollywood tax credit package that failed earlier this year.

More than 20 labor unions representing about 25,000 construction workers in Southern Nevada have formed a new group called “Nevada Jobs Now.” They want lawmakers to approve Assembly Bill 238, which would give $95 million in tax credits over 15 years to movie studios and filmmakers.

The proposed Summerlin Studios project sits at the center of this debate. Warner Bros., Sony Pictures, and Howard Hughes Holdings want to build a 31-acre film studio near Town Center Drive and Flamingo Road in Las Vegas.

How the Tax Credits Would Work

The deal has some strings attached. Studios would need to shoot at least half of their movie in Nevada. They would also need to finish within 18 months of starting. The tax credits would not start until construction begins on the studios.

“This special session gives Nevada a second chance to create over 19,000 construction jobs today and more than 17,000 permanent jobs tomorrow,” said Tommy White from the Laborers International Union. He claims the project would bring $3 billion in annual economic impact.

What Happened Last Time

The bill died in June when the regular legislative session ended. Senate Republicans stopped proceedings before the midnight deadline. They objected to changes about Legislative Commission positions. Several other bills died that night too, including crime legislation.

Assembly Majority Leader Sandra Jauregui, who sponsored the original bill, said she has heard from “hundreds of constituents” who want the project to move forward.

The Numbers Tell a Different Story

Here is where it gets interesting for taxpayers. A study from the Nevada Governor’s Office of Economic Development found that Nevada would only get back 52 cents for every dollar spent on tax credits. That is less than what the studio developers originally claimed.

The study looked at a net film tax credit cost of $1.425 billion over 15 years. Getting back only half of what you spend does not sound like a great investment for taxpayers.

Why This Matters to Limited Government Conservatives

This proposal raises serious questions about government picking winners and losers in the economy. Should taxpayers subsidize Hollywood studios? These are private companies that make billions of dollars in profits.

The math does not add up. When government spends a dollar and only gets 52 cents back, that is a 48 cent loss. Multiply that across $1.4 billion, and Nevada taxpayers are looking at a huge hole in the budget.

Howard Hughes Corporation CEO David O’Reilly mentioned concerns about “storm clouds” in the economy and changes in international tourism. But propping up new industries with tax credits is not the job of government. Markets should decide which businesses succeed or fail.

The Other Side

Supporters argue Nevada needs to diversify its economy beyond gaming and tourism. They say the construction jobs and permanent film industry jobs would help thousands of families. Union leaders claim this is an “economic engine” that will benefit the state for decades.

Governor Lombardo has not announced when he will call the special session or what specific topics will be covered. He said the goal is: “to finish what the Legislature left unfinished.”

What Happens Next

The special session could happen any time in the next few months. Lawmakers will debate whether to approve the tax credit package. The outcome will show whether Nevada chooses free market principles or government subsidies for big business.

Conservatives who believe in limited government should watch this closely. They can contact their state legislators to express their views. The question is simple: Should your tax dollars subsidize Hollywood?

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Brittany Sheehan is a Las Vegas-based mother, policy advocate and grassroots leader. She is active in local politics, successful in campaign work and passionate about liberty.