LAS VEGAS (KTNV) — New economic reports show that proposed film studio projects in Southern Nevada might not be able to pay for themselves.
On Monday afternoon, two reports from Applied Economics were posted by the Nevada Governor's Office of Economic Development. Analysts took a closer look at the potential fiscal and economic impact assessment for Summerlin Studios, which would be run by Sony, as well as Nevada Studios at UNLV Harry Reid Research and Technology Park, which Warner Bros. Discovery has previously shown interest in.
Lawmakers are discussing two bills that would commit the state to $1.6 billion over 15 years in future budget cycles.
Summerlin Studios could be authorized by Assembly Bill 238.
According to the economic analysis, state and local governments would only recover 52 cents of every dollars in tax credits for the Summerlin Studios.
"While the studio development will directly and indirectly stimulate new economic activity in the state, which is the goal of economic development, 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," analysts wrote in part. "There is no way to verify that the indirect and induced impacts are happening in Nevada in response to this specific development."
You can read the full Summerlin Studios report below.
Assemblywoman Sandra Jauregui, D-Clark County, sponsor of AB 238, said in a recent interview that the studio project could help Nevada, especially if the economy slides into a recession.
AB 238 advanced out of committee on Saturday.
WATCH | Steve Sebelius talks to Assembly Minority Leader Sandra Jauregui about bill that could lead to movie studio in Southern Nevada
Senate Bill 220 would also offer tax credits in conjunction with an education program at the Harry Reid Technology Park in partnership with UNLV.
Analysts also stated that project would only lead state and local governments to recovering 78 cents of every dollar in tax credits, based on the construction and operations of the development and new studio and screen tourism.
You can read the full Nevada Studios report below.
Lange sent an open letter to members of the Nevada Legislature, press, and other stakeholders following the two reports being released.
"We appreciate the need for rigorous analysis and scrutiny when public tax policy is at stake. However, we must be clear this new report utilized a dramatically different methodological approach and as a result arrives at flawed and misleading conclusions. We also note that GOED has not published the reports.
There is no single model for evaluating economic return, but the model must fit the policy. The Camoin study uses LightCast, a labor-forward platform that incorporates real-time market data and sector-specific growth assumptions. The Applied Economics review uses IMPLAN, a more conservative tool based on historical averages and broad macroeconomic assumptions.
Of the two, LightCast provides the more accurate and relevant model for SB220, which is focused on forward-looking, innovation-driven sectors like digital content, advanced media, and creative technology. IMPLAN fails to capture this dynamic.
While the Applied Economics report contains many errors, here are the most serious five concerns:
Mischaracterization of the Creative Technology Initiative (CTI)
CTI will be the nonprofit that supports research and development of technologies and businesses linked to the film industry. The report inaccurately claims that CTI companies would be eligible for film tax credits. This is false. CTI is supported by indirect revenue and workforce development funds not transferable tax credits.
Failure to Address the Ramp-Up Period
While referencing the 18-year program window, the report does not analyze the phased ramp-up structure of SB220, which directly impacts return on investment, risk mitigation, and exposure to contingent liability during the first three years of the program. It also fails to recognize the impact of a $300 million capital expenditure, which as part of the public private partnership can be counted towards a public economic value.
Incorrect Construction Labor Assumptions
The A.E. report suggests that only 25% of labor is sourced locally, when our actual assumption is 75% Nevada-based labor. Through a Project Labor Agreement (PLA), SB 220 has also committed to those jobs being union. This grossly understates the job creation and income effects for local workers.
Invalid Wage and Industry Assignments
In multiple sections (Media Lab, Creative Office), Applied Economics substitutes unrelated wage categories, leading to understated labor income. For example, our Creative Office estimates use video game publishing (VGP); AE defaults to internet publishing and design services.
Dismissal of Screen Tourism and Studio Visitor Impacts
The report discredits screen and studio tourism as unverifiable, despite strong industry precedent and recent global benchmarking studies (e.g., Nordicity for Warner Brothers Discovery). This reflects a narrow understanding of modern studio economics.
Let’s be clear, while return on investment through taxation is an important part of the equation, the GOED report does not address the true value of job creation over the life of the bill. We can conservatively estimate those jobs at over 80,000 work years over the life of the bill.
SB220 is a forward-facing proposal aimed at building a next-generation economic base in Nevada. 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 opportunity for Nevada and its citizens."
On Wednesday, Lange stated the two bills could be merged together and that discussions are underway at the state legislature.
"To secure the economic vitality of Nevada, it’s essential the legislature pass a unified film bill this session. We have no time to lose and so much to gain in terms of permanent jobs, unprecedented workforce development and education investment," Lange told Channel 13 through a written statement. "Not to mention, with the CTI component proposed in SB 220, passage would mean genuine economic diversification encompassing not only film production but also high-demand industries including aerospace and defense, healthcare technology and video game publishing. A unified bill allowing both Nevada Studios and Summerlin Studios to advance their visions will bring unmatched returns to the state in terms of growth and sustainability for today’s workforce and generations to come."
The new details regarding the proposed merged bill were not immediately available, as of Wednesday afternoon.
Some organizations are against the film tax credit bills saying they will take money away from areas such as education.
"We can't afford handouts to giant corporations right now," said Alexander Marks, deputy executive director of the Nevada State Education Association, which is a teachers' union. "We rank 47th in the nation in per pupil funding with the largest class sizes. Even after the record increases last [legislative] session, Nevada still trails the national average by more than $4,000 per student."
In February, Gov. Joe Lombardo told our Steve Sebelius that he was skeptical of film tax credit bills.
"Once again, the devil's in the details, right?" Lombardo said. "And as you presented, the narrative you just provided, I'm not supportive as the governor. I'm not supportive."
WATCH | Gov. Lombardo opposes teacher strikes, film tax credit in exclusive interview with Channel 13
The bills will also face hurdles in terms of lawmakers finding the funds for them.
State revenue is expected to drop by $191 million due to tariffs and trade war uncertainties, according to a report that was presented during the Economic Forum.
The Legislature is bound by law to follow the Economic Forum's projections when building the state's final budget, which must be approved by June 2. That means some bills, like the proposed film tax credit bills, could fall by the wayside.
WATCH | Steve Sebelius breaks down Nevada's Economic Forum, revenue projected to drop $191 million