Tag Archives: Senate Bill

Nevada’s new film tax credits to benefit casinos

Until recently, Nevada was one of a handful of states that did not offer film companies tax incentives. With the passage of Senate Bill 165 last month qualified film producers are eligible for transferable film credits valued at 20 percent of production costs. Lawmakers were in part persuaded by testimony (offered by film maker Nicholas Cage) that such credits would result in a film boom for Nevada. Some features of the credits: they are limited to $20 million a year. Productions that shoot 60 percent of their work in Nevada and spend between $500,000 and $40 million may earn a credit for 15 percent to 19 percent of total in-state, qualified expenses. Each production is capped at $6 million in credits.

Nevada does not tax individual or corporate income. The credits may be applied to payroll taxes, casino taxes and insurance premium taxes. Gasoline, cigarette, liquor, sales, live entertainment and property taxes aren’t eligible.

Part of the value of Nevada’s credits to film companies is that they are transferable. The credits can be sold by film companies to other Nevada businesses, such as casinos, becoming, “the coin of the realm.”

The Las Vegas Sun News explains how the new program will help generate a niche financial industry of brokers to help parties buy and sell credits. For example, a film company with a $1 million production and 15 percent credit is awarded $150,000 by the state of Nevada. If the film company only pays $50,000 in payroll taxes, that leaves $100,000 in credits on the table. This credit can then be sold at discount (let’s say 80 percent of the value of the remaining credit) to an interested buyer. Thus, a casino with a $100,000 tax liability can buy a tax credit from the film company at a price of $80,000.

The legislature promises to study the effectiveness of the program after a five-year trial period.

 

Job creation or job protection in California?

The Mercury Sun News editorial provides a strong critique of several pieces of new Sacramento legislation, claiming the bills are simply jobs protection measures for unionized employees.

The bills include Senate Bill 469 which requires cities to conduct an economic impact analysis before approving big-box stores that sell groceries. Unions are for it. Grocers and land developers are against it.

AB 646 and AB 455 involve labor negotiations with unions. SB 931 forbids local government from using taxpayer funds on lawyers or consultants advising on how to get around union rules – which could be interpreted in one of two ways – does it limit local spending or does it favor unions?

And AB 438 requires public notice before a city can withdraw from a public library and contract with a private provider while “barring lower pay rates and layoffs in a new system.”

If the editors’ analysis is correct, the bills show how public sector unions as a special interest can acheive their goals outside of the collective bargaining process. At least one California legislator has introduced a bill aimed at collective bargaining reform. It could be that these bills aimed at local government may be part of unions’  pro-active strategy to prevent layoffs or firings of public employees should local governments introduce competition to city services.

California May Have a Budget!

Here are some facts:

  • The budget is 99 days overdue. PA and NY’s budgets were also-past due, but they were resolved long ago.
  • According to reports, the state’s $19 billion budget gap is closed:

with what lawmakers call solutions and creative accounting tactics, some of which push off payments to the next fiscal year [MM: Sound familiar?]

  • The deal was made possible by a recent ruling by the state’s Supreme Court. It upheld Governor Schwarzenegger’s mandate that 200,000 public employees take unpaid days off.
  • The deal required $5.3 billion in federal aid. If we extrapolate the result from Sobel and Crowley, the federal aid may stimulate anywhere from $1.7 to $2.2 billion in new state taxes. 
  • Last month, the Wall Street Journal reported:

On the brink of insolvency, California may have to pay its bills with IOUs soon. A budget was due three months ago, and the legislature hasn’t passed one.

The lawmakers can, however, point to a list of other achievements this year. Awaiting Gov. Arnold Schwarzenegger’s signature, for example, is a bill that would bar the state from filming cows in New Zealand. It’s the fruit of five committee votes and eight legislative analyses.

California lawmakers also voted to form a lobster commission. They created “Motorcycle Awareness Month,” not to mention a “Cuss Free Week.”

And they kept the California state rock safe. Senate Bill 624 had sought to bust the rock, serpentine. Adamant opposition protected it, but sponsor Gloria Romero declared this “an issue we should address again.”