Last week, Gov. Brian Sandoval announced that he would be calling a special session this week to vote on a package of tax abatements and transferable tax credits for Tesla.
In exchange for Tesla opening a new factory in Nevada, Sandoval proposed to give Tesla up to $1.3 billion in targeted tax breaks. At the press conference announcing the package, Sandoval and his economic development team, led by Steve Hill, presented their projections of the impact that Tesla’s move to Nevada would have.
These rosy projections contained no economic analysis. The message was: “Trust us.”
The governor, of course, will leave office no later than 2018, which means it will be taxpayers who are left holding the bag if all doesn’t go as planned.
Consequently, taxpayers need lawmakers — most of whom hope to remain in the Legislature longer than the next four years — to carefully examine the Tesla package and make a good decision based on facts, rather than hype, hoopla or promises.
Here are 10 questions that need to be answered before lawmakers even consider voting for the Tesla package:
Process and transparency
- Where are the bill drafts? Why hasn’t legislative language been released to the public? Does it not yet exist?
- Why is this happening so quickly? Why should lawmakers approve giving away up to $1.3 billion less than a week after learning Tesla wants to move to Nevada? Should not the public and lawmakers have at least 72 hours to review any proposed legislation before it is voted on?
- The Nevada Constitution says the governor may only call a special session “on extraordinary occasions.” Does giving one company tax abatements meet that legal standard? What risks exist of constitutional challenges that would overturn facilitating legislation passed during the special session?
Economic risk vs. reward
- No matter the amount of hype, every business venture is a risk. How are Nevadans protected if Tesla’s business plan doesn’t work?
- Where is the independent analysis of this deal and the risks involved? The governor and his Office of Economic Development are, of course, deeply invested in it. Will lawmakers be reviewing a worst-case scenario, in addition to the best-case scenario that’s already being presented?
- Will GOED release anything more detailed than a two-page summary of expected economic impacts? Or did GOED not conduct a more detailed analysis?
Impact on current Nevadans
- A business investment of this size should attract many new people to come to Nevada, thereby increasing the demand for government services. What government spending will be cut to pay for these additional services? Or, will the governor and lawmakers expect other businesses and residents to bear higher taxes for the benefit of this one company? Which taxes will lawmakers propose raising?
- Currently, 1.26 million jobs exist in Nevada. What do legislators say to those job creators and their employees who aren’t getting the same generous deal as Tesla?
- How does the state of Nevada prevent other large companies from demanding similar company-specific tax breaks?
- Why is the state creating a different set of rules for one company? How does this square with the concept of equal justice under the law?
Until these questions are answered, taxpayers are not protected — and no vote on Tesla, for or against, can be cast responsibly.
Andy Matthews is president of the Nevada Policy Research Institute, a non-partisan free-market think tank. For more visit http://npri.org.