We’ve seen this movie before — and it really hasn’t gotten any better with repeat viewings. 

When a last-minute bill to massively expand Nevada’s film tax credit program was shelved by lawmakers at the end of last year’s legislative session, pretty much everyone knew it would return in 2025. 

Well, consider the sequel “in production.” 

With Warner Bros. Discovery now expressing interest in expanding to Nevada — provided that lawmakers shell out enough tax credits — we’re pretty much guaranteed to see the issue get its day on the floor of the Legislature in 2025. 

Of course, Sen. Roberta Lange (D-Las Vegas) was already planning to bring back a slightly reworked version of her previous proposal. Lange’s 2023 bill would have expanded the program from its current limit of $10 million per year to an annual cap of $190 million — a whopping 1,800 percent increase to the current program. According to The Nevada Independent, Lange’s now considering a mere 850 percent increase instead, capping the program at $95 million annually for the next 17 years. 

However, that’s still a total of $1.6 billion in tax credits during the life of the program — which seems like an awfully large handout for an industry composed primarily of for-profit corporations with billions of dollars in annual revenue. 

As with all other “economic development” schemes that siphon public dollars toward private pockets, lawmakers will undoubtedly fawn over the promise that such a deal would create jobs, diversify the economy and bring in massive new investors to the state. For its part, Warner Bros. has already promised to invest $850 million in Southern Nevada if there’s an expansion to the tax credits.

So too has Sony Pictures. Earlier this year, Assembly Majority Leader Sandra Jauregui (D-Las Vegas) announced her plan to introduce legislation that would create a production studio and workforce training program in Las Vegas. The deal would include Sony partnering with developer Howard Hughes Corp. to make such a dream come true.

Both those investments undoubtedly sound like music to the ears of politicians who are hungry for some photo-ops with movie stars at future ribbon cutting ceremonies. 

The economics of such schemes, however, rarely work out as rosy as lobbyists suggest. In fact, real world data shows what serious economists have long understood to be true: Such programs are not a wise investment of otherwise scarce public resources.  

The New York Department of Taxation and Finance, for example, released a report last year that showed an anemic 15 cents in direct tax revenue generated by every dollar of tax breaks doled out by the state. Even beyond that abysmal return on investment, the report noted that the tax “incentives” did little to actually bring new film projects to the region. 

“It is highly likely, given the existing workforce and infrastructure, that much of the economic activity would occur in [New York State] regardless of the credit,” the report stated. 

In other words, the Empire State not only earned a measly return on its investment, but it didn’t even accomplish what it set out to do: boost film production levels well above what they would have otherwise been without the corporate handout. 

Such results aren’t an anomaly. In fact, New York is lucky to have seen any return at all on its investment.

In Georgia, a 2023 audit conducted by Georgia State University's Fiscal Research Center found that the credits in the Peach State actually had a negative impact on net job creation — and the local jobs that were supposedly “created” by the film industry cost taxpayers $160,000 per position. 

That’s hardly what one would describe as an “economic benefit.” 

Part of the problem inherent with such programs is how the tax credits are structured. Rather than merely being an abatement on taxes owed, they’re effectively coupons from the treasury that are redeemable for cash — either by returning them to the state for a refund or selling them to other corporate entities through specialized markets. What this means is even if a studio has no tax liability in the state, or owes very little, they’re still able to turn the credits into cash at the treasury’s expense. 

No wonder such deals look pretty enticing to studios that have been undergoing dramatic turmoil and cash flow uncertainty in recent years. After all, even beyond last year’s writers’ strike and the looming impact of COVID on box office receipts, the film industry has been shrinking as studios confront the challenges of an all-digital world full of free content. With streaming fundamentally altering the business model of moviemaking, the studios have been slow to keep pace in a more decentralized and uncertain media landscape. 

And even among the streaming providers, getting a handle on how to turn reliable profits and maintain financial stability in our current age has proven difficult. Despite dominating the streaming market, Netflix has cut down on its number of original movies to help keep itself in the black. And as popular as Amazon Prime Video, Hulu and Peacock might be, their combined streaming viewership on TV sets is still a smaller share of the market than good, old-fashioned YouTube. 

Those market dynamics say something about the potential future of the industry — namely, that it’s far more unpredictable than it used to be when the large Hollywood studios were the undisputed royalty of the entertainment world. 

None of that market disruption necessarily means Warner Bros. or Sony aren’t going to keep their promises about investing in Nevada, but it does indicate that the future of the industry is far from certain. And such uncertainty should be enough to give any normal investor a moment of pause. 

Of course, lawmakers aren’t “normal” investors. After all, it’s not their own money they’re investing, which is why they so often disregard the warnings of economists and taxpayer advocates when the right lobbyists show up during the session. Indeed, when corporate interests pledge economic growth, a few high-profile job events and a bit of glamor, it’s easy to find electeds who are more than willing to hand over the keys to the treasury.

However, we’ve seen this movie before. And despite the claims made by crony corporations and their politically connected lobbyists, it doesn’t conclude with the cliched fairy tale ending of “happily ever after.”

Michael Schaus is a communications and branding expert based in Las Vegas, Nevada, and founder of Schaus Creative LLC — an agency dedicated to helping organizations, businesses and activists tell their story and motivate change. He has more than a decade of experience in public affairs commentary, having worked as a news director, columnist, political humorist, and most recently as the director of communications for a public policy think tank. Follow him at SchausCreative.com or on Twitter at @schausmichael.