Little v. State of Nevada, et al.

NPRI’s Center for Justice and Constitutional Litigation has filed a lawsuit in the First Judicial District Court of the State of Nevada to put an end to the state’s unconstitutional Catalyst Fund.

CJCL filed the lawsuit on behalf of Nevada resident and business owner Michael Little against the State of Nevada, Nevada Governor’s Office of Economic Development (GOED) and GOED Executive Director Steven Hill after the defendants illegally created and implemented a fund that gives taxpayer dollars to private companies, despite a clear prohibition of such subsidies in the Nevada Constitution.

Article 8, Section 9 reads, “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.”

The plaintiff, Michael Little, is an alternative-energy entrepreneur and a taxpayer whose alternative-energy competitor, SolarCity, has received a commitment from GOED to provide it with a $1.2 million taxpayer-funded subsidy.

In addition to disregarding the constitution, the state is forcing a business to subsidize its competitor, which is fundamentally unjust and similar programs in other states have lead to charges of corruption and favoritism.

After receiving taxpayer handouts, numerous companies, including Solyndra, Abound Solar, Fiskar, and ThromboVision have gone belly up. Along with being unconstitutional and unjust, GOED subsidies are bad economics.

Taxpayers have recognized this. In 1992, 1996, and 2000, Nevada voters overwhelmingly rejected proposed constitutional amendments that would have allowed government loans to or “investments” in private businesses.

Despite that, in 2011, the state devised the Catalyst Fund and created pass-through entities to dole out the subsidies. Nevada’s constitutional protections will be rendered meaningless if state politicians can avoid them by creating a local government agency for the express purpose of taking constitutionally prohibited actions.

The lawsuit calls for the court to:

  • Declare that all defendants, in operating the Catalyst Fund, are violating the Nevada Constitution
  • Enjoin all defendants from continuing the Catalyst Fund program or any such program that subsidizes private entities under the guise of economic development or any such label