A local filmmaker, Jeff (not his real name), contacted me recently about the fact that he and some other people in the film community were trying to push for some kind of film incentive for Nevada. Since most states have some kind of incentive program in place, it certainly makes sense and undoubtedly encourages film production.
I told him that I was with him 100%. We absolutely need a film incentive in Nevada. The problem, as I see it, is that the timing is terrible. In the midst of this recession, I can’t see the legislature making this kind of move. Everyone in the state is looking at ways to increase revenues, not offer tax breaks to anyone, especially people from out of state.
Now, how this would work gets a little complicated. Jeff tells me they’re pushing for a transferable tax credit. How that works is, a film company comes to Nevada to shoot and gets credit for certain expenditures. The number Jeff is telling me is 25%, so a production comes to Nevada and gets credit for “qualifying expenditures”. Ideally, everything would quality, but that’s generally not how it works. It could be as little as accommodations, food, local equipment purchases and rentals, maybe more, maybe less. Anyway, the “rebate” to the production comes in the form of a tax credit. Basically a voucher that can be turned in with state tax returns to cover X dollars. Now, the obvious problem with this is that out of state production companies don’t have state of Nevada tax liabilities. The closest thing to a “fix” for this is that these tax credits are transferable. So, our production company can sell these credits to a company or individual who does have a state of Nevada tax liability. With me so far? Of course, the buyer is going to want the tax credit discounted, otherwise there’s not reason for him to go through the trouble Spend $1000 on $1000 tax voucher or mail in $1000 check with your tax return. The latter is obviously easier. So, the 25% tax incentive isn’t as good as it appears since it has to be discounted to be sold…and the hassle that goes along with it. Of course, what qualifies is also a huge issue.
The best state tax incentives are the ones that a) cover all expenses in the state and b) take the form of a rebate instead of a tax credit. Some states actually review the books after a production wraps and cuts a check to the production company for X%. Now THAT is how it should be done. Granted, either way, it’s money out of the state coffers, which is why the timing on this is so terrible.
So, I relayed to Jeff that I love the idea, but think the timing sucks. I don’t see any way this will fly in the current environment. However, I did agree to come out to a dinner, to represent local filmmakers wanting to shoot in Nevada, and meet with some legislators about the issue. Long story short (too late?), this isn’t going to happen.
Jeff is still enthusiastic. I respect the time and energy he’s putting in to this. I just don’t see it.
Meanwhile, guys like me who want to shoot close to home are forced to consider other options. Arizona is just a few hours away and entice filmmakers. So with the new project, I have to weigh incentives out of state against the cost of relocating the production. The smaller the show, the less this makes sense, so probably not on the new film. Next time around? We’ll see…