The 2013 Legislature was a resounding success … if your name is Nicolas Cage or Warren Buffett, that is.
Sadly, though, little action was taken on measures that would have provided additional value to taxpayers or improved the educational opportunities available to Nevada’s children. In fact, the 2013 Legislature again saddled Nevada households with higher taxes and electricity bills without adopting measures that would improve government efficiency.
Among the session’s major outcomes was a new law that requires NV Energy to close its Reid-Gardner power plant ahead of schedule and replace it with new natural gas-fired power plants.
In a boon to utility shareholders — principally Warren Buffett, pending approval of the utility’s sale — ratepayers will be forced to continue paying the utility for its abandoned investment in Reid-Gardner as well as its construction of the replacement power plants. Similar legislation passed in Colorado in 2010 is expected to increase power bills of that state’s ratepayers between 11 and 50 percent.
Because shareholders are guaranteed a 10.5 percent return on equity for any power plants that NV Energy constructs, they are set to rake in substantial profits as a result of the new law. There’s a reason Buffett himself placed calls to key Nevada lawmakers in the days leading up to the bill’s passage.
Buffett wasn’t the only mega-millionaire to successfully get state lawmakers to hand over your money, however. Lawmakers swooned around actor/film producer Nicholas Cage when he appeared in Carson City, personally requesting a handout that would pay film producers to shoot movies in Nevada.
As is typical with tax-incentive programs, Cage promised the emergence of a new industry and many new, high-paying jobs for Nevada. In return, he sought a tax credit that would reward film producers with up to 28 percent of their filming costs — an amount far in excess of their actual tax liability. In effect, the program would amount to an outright transfer of cash from Nevada taxpayers to Hollywood producers.
Similar programs in other states have failed to produce the promised jobs and have resulted in a net loss to states. In Louisiana, estimates from nonpartisan legislative staff put the net loss to that state’s taxpayers at about $48 million annually. In North Carolina, legislative staff estimates that the $30.3 million spent on that state’s program in 2011 attracted only 55 to 70 new jobs — whereas an across-the-board tax cut of the same size would have created around 400 new jobs.
Although Nevada lawmakers received this evidence during hearings, they nevertheless gave Cage a slightly modified version of the handout he sought — capped at $20 million annually.
After dedicating so much time and taxpayer money to their favors to Buffett and Cage, legislative leaders then claimed they lacked time to even consider many proposals that would save taxpayers money or increase their return on investment. Ideas for public pension reform, charter agencies and modifications to local-government employee relations — all based on successful reforms enacted on a bipartisan basis in other states — failed to even receive a hearing.
Other concepts, including changes to prevailing-wage and construction-defect laws and education reforms that would have given low-income students access to better schools or brought illustrious Teach for America instructors to Clark County, received hearings, but then were summarily dismissed without even a committee vote.
In fact, despite their avoidance of these substantive issues, lawmakers even ran out of time to complete their primary objective — raising your taxes — and had to be called back into a special session by Gov. Brian Sandoval to take more money away from you.
During the regular session, lawmakers had already raised statewide sales taxes, payroll taxes and business license fees, and had authorized additional sales and property-tax hikes in Washoe County, as well as a gas-tax hike in Clark County.
Sandoval endorsed all of these tax hikes, but was upset when lawmakers failed to authorize an additional 0.15 percent sales-tax hike in Clark County to reward the police union before adjourning. So, he called the Legislature back into session to ensure they would pass this final tax hike.
Had either Sandoval or legislative leaders attached the same importance to boosting government efficiency and education quality that they did to raising taxes and pleasing special interests, great things could have been achieved.
As it is, however, their priorities display an obvious disconnect with Nevadans, who are still struggling to overcome the impact of a devastating recession.
Geoffrey Lawrence is deputy policy director at the Nevada Policy Research Institute. For more visit http://npri.org.