Film companies, when they decide to shoot on location, used to be guided by the quality of location. This has always been, it would seem, an advantage for Las Vegas and, to a lesser extent, Nevada. Sure, in a pinch you could find another desert state to fill in for Nevada, but there’s only one Vegas.

And earlier this year the Nevada Film Office announced that production revenue for the state in 2007 topped $100 million for the eighth straight year. But filmmakers are no longer going to shoot in locations that look best or best serve the story; instead they are picking locations that are cheapest. That requires state incentives—tax rebates or credits—by which filmmakers can save on production costs. “There are only nine states that do not offer tax incentives,” says Sarah Bontrager, spokesperson for the Nevada Film Office. “And we’re one of them.” As a result, Nevada is in danger of losing an ever-greater amount of revenue from future film productions.

So what gives? Charles Geocaris, director of the Nevada Film Office, says that one of the state’s problems is that “there’s this constitutional law that states Nevada can’t offer these incentives.” The state constitution prohibits “gifts or loans of public money to certain corporations.”

“They keep saying they’re barred by the constitution,” says Hal Kessler, an entertainment lawyer in Chicago who’s helped to create federal film incentives as part of the 2004 American Jobs Creation Act. “I’ve read their language they submitted by the state. They’re not barred. They’re just using that as an excuse ...”

Another problem, of course, is that the state is in the midst of budget crisis; giving incentives to shoot movies is not a high priority. But maybe it should be. States such as Michigan, New Mexico, Louisiana, Washington and Maine are reaping the benefits. “Michigan has infrastructure,” says Geocaris. “Permanent jobs. That’s all the things we feel can happen here in Nevada.”

Michigan has already seen film spending in the state jump to a stunning $300 million since its incentive program began earlier this year. (Last year the figure was around $7 million.)

“It’s really an amazing impact on the economy,” says Michigan Film Office COO Anthony Wenson. The state has approved 60 productions for filming.

Michigan’s incentive is hefty—up to 42 percent—and combined with federal tax breaks, can cut film production expenses by around 75 percent. Kessler describes it this way: “It’s like saying to a person who’s going to open up a restaurant, ‘You go and get your lease, all your restaurant equipment and stock it for all the food you need. Before you even open your doors here’s a check for 75 percent of what you spend.’”

True, productions looking for a Nevada landscape probably won’t leave for Michigan, no matter how generous the tax breaks. But they are leaving for New Mexico. “Everything is going to New Mexico,” Bontrager says. “We’re losing not onlythe revenue but the jobs.”

The biggest example film officials point to is Love Ranch, a Taylor Hackford film starring Helen Mirren and Joe Pesci about the couple who opened the first brothel in Nevada. The film was slated to be filmed in Reno, and would have generated $15 million for the local economy. Instead, lured by New Mexico’s 25 percent tax-incentive program, Love Ranch went to Albuquerque. Instead of two and a half months here, the state got two days worth of filming, which brought in only $700,000. “We got basically nothing,” says Geocaris.

In a KUNR interview with Hackford back in March, the director explained the decision: “If Nevada had a film-incentive program like New Mexico, I would have been here in two seconds. Why wouldn’t I want to shoot the film where it actually took place?”

Another project, Sex & Lies in Sin City, had locations in Vegas and Pahrump. Instead the film is shooting in Santa Fe. A similar fate befell Dolan’s Cadillac, based on a Stephen King short story about a man who seeks revenge after his wife is killed by a Vegas mobster. The project, says Bontrager, was partially written for Nevada, then ended up in Regina, Canada, after just a few fast second-unit days. Paul Thomas Anderson scouted northern Nevada for There Will Be Blood and apparently loved some of the ranches the film office showed him. But the production went to Texas instead.

Geocaris says that in the last two legislative sessions, a small 5 percent tax incentive was introduced in committee. The first time it died there. The second time it passed the Senate but not the Assembly. Senator Bob Coffin, who sponsored the bill, feels industry lobbyists didn’t do a good enough job convincing assemblymen, who, he says, “were worried about it becoming like the green buildings exemption, that they were taking a lot of heat for in the last session.” Coffin plans to draft the bill anew in the next session, but not to sponsor it.

Federal incentives for productions to shoot in the U.S. will sunset at the end of the year unless Congress extends them. According to Kessler, this past May the House passed a bill extending the law through 2009; the Senate will decide later this month.

Meanwhile, Nevada hopes its current incentives—“Free drinks when you gamble,” notes Geocaris—are enough.