15 questions that need to be asked about the Faraday deal
Gov. Brian Sandoval announced he’ll call a special legislative session this week to approve over $300 million in tax breaks, subsidies and special privileges for a secretive electric car company.
Faraday Futures, owned by a Chinese billionaire, has conditioned its building of a plant outside North Las Vegas upon the special state legislation.
Earlier this year, however, Sandoval and state legislators imposed on Nevada businesses the largest tax hike in state history, including new burdens on the small businesses that actually create most of the Silver State’s new jobs.
Consequently, taxpayers have questions that deserve answers. Here are 15 of them:
Questions on the Faraday business
1. What is Faraday’s business plan? The electric-car market is already plagued by vehicles dependent on government subsidies and companies operating at a loss. If Faraday wants State-of-Nevada money, taxpayers deserve warranties the company will generate profits within the deal’s timeframe.
2. How well will Faraday’s cars be styled? If Nevada taxpayers are effectively investing in Faraday’s business, they deserve to know the car they’re subsidizing won’t turn out to be some Edsel — or a Yugo.
3. In what range are Faraday’s cars expected to be priced? If Faraday wants Nevadans to effectively serve as co-investors, taxpayers deserve to know how competitively priced the product will be. Is this a car that average Nevadans can purchase?
4. Does the Communist Chinese government, either directly or indirectly through a state-backed investment fund, own any portion of Leshi — the company behind Faraday Futures? In early November 2015, the LA Times reported that “a state-backed investment fund bought a 1.5% stake in Leshi.” If Nevada citizens are to be made to provide handouts, we deserve to know if we’re subsidizing — directly or indirectly — communist Chinese government bigwigs.
5. What percentage of Faraday’s sales are expected to be in the United States market as opposed to China or other foreign countries? Are Faraday’s vehicles going to enrich local markets, or primarily the Chinese auto-industry?
Questions on project assumptions
1. Are the 3,000 temporary construction and installation workers separate from, or included within, the 4,500 direct-jobs number?
2. Various “economic data” and “fiscal projections” are being touted to justify this deal. Will the economic analysis and assumptions underlying those data and projections be available to the public before the state is committed?
3. Who created the “economic data” and “fiscal projections”? If the projections weren’t created by the Legislative Counsel Bureau, who paid for them?
4. How much will the new folks brought to Nevada by Faraday Future cost in government services over 20 years?
5. What are the total projected ancillary costs to taxpayers for building out and maintaining the supporting Apex infrastructure — including utilities and highway expansions?
Questions on the bills and subsidies
1. What is Faraday’s estimated commerce tax payment in each of the next 15 years? Will Faraday even pay the commerce tax if it doesn’t sell any cars in Nevada?
2. Why does the governor support eliminating taxes for a secretive out-of-state billionaire, after jacking up taxes on current Nevada employers and families?
3. Faraday is obviously concerned about the cost of energy in Nevada, and is scheduled to receive a subsidy through the Economic Development Rate Rider program. Why should Nevada small businesses have to pay high electricity rates, while subsidizing an out-of-state company? What will be done to lower Nevada’s energy rates for the rest of the state’s businesses?
4. If state revenue projections fall below expectations in coming years, will the deal with Faraday be renegotiated before higher taxes on the rest of Nevadans are considered?
5. What are the consequences if Faraday fails to meet the conditions outlined in the Governor’s proposal — such as employment or community investment goals?
Victor Joecks is executive vice president and Michael Schaus is communications director of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. For more visit http://npri.org.