State’s $1.2 million gift to SolarCity provides ‘No net benefit to Nevadans’ — economist

Nevada Journal

CARSON CITY An expert-witness report filed in a constitutional challenge to the State of Nevada’s “Catalyst Fund” says taxpayer-dollar subsidies like the $1.2 million the state is attempting to give SolarCity, Inc. “do not provide any net benefit to the state or to its citizens.”

Dr. Randall G. Holcombe — DeVoe Moore Professor of Economics at Florida State University — made the comments and is an expert witness in the lawsuit brought by NPRI’s Center for Justice and Constitutional Litigation (CJCL) to defend the Nevada Constitution’s ban on the gifting of taxpayer funds to private corporations.

Article 8, Section 9, of the Nevada Constitution 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.”

Dr. Holcombe is the author of 15 books, more than 150 peer-reviewed articles published in academic and professional journals, and more than 30 articles and reports for think tanks and public policy organizations.  He has testified before committees in the U.S. Congress and the Florida legislature.

CJCL is representing a clean-energy entrepreneur, Michael Little, whose competitor, SolarCity, has a commitment from the Governor’s Office of Economic Development of a $1.2 million taxpayer-funded subsidy. 

The lawsuit was filed by CJCL on Feb. 19, 2014. On March 24, The Nevada Legislature filed a motion to intervene in the case. Permission to do so was granted by the Court on April 11, 2014.

Attorney Joseph Becker, director of NPRI’s Center for Justice and Constitutional Litigation has characterized the Catalyst Fund as — in addition to being patently unconstitutional — being “fundamentally unjust, since it makes a business owner subsidize his competition.”

“Today’s report,” he continued, “provides additional expert reasons as to why the Court should end these taxpayer-funded subsidies.  History has shown that companies receiving government handouts — like Solyndra, Abound Solar, Fisker and ThromboVision — often fail, personally enriching the politically connected but wasting hundreds of millions of taxpayer dollars. This history is reinforced by Dr. Holcombe’s Expert Report.”

Becker noted that, for decades, the Legislature acknowledged that Article 8, Sections 9 and 10, of the Nevada Constitution prohibited the state from providing subsidies to private businesses. In recognition of the clear words of the Constitution, the Legislature even tried three times — in 1992, 1996 and 2000 — to amend the Constitution to allow subsidy schemes similar to the Catalyst Fund.

Voters, however, overwhelmingly rejected those proposals.

Discovery in the case will continue through early November.

Case documents:

The Center for Justice and Constitutional Litigation is a public-interest law organization that litigates when necessary to protect the fundamental rights of individuals as set forth in the state and federal constitutions.

News You Can Use from Nevada Journal

Editors: Reprint permission, in whole or in part, is granted under a Creative Commons Attribution-ShareAlike 3.0 license.

Nevada Journal, a member of the Nevada Press Association (NPA) and Investigative Reporters & Editors (IRE), is an independent nonprofit reporting effort that adheres to the SPJ standards of professional journalism and specializes in in-depth and investigative journalism.

For the last 20 years, Nevada Journal has been published by the Nevada Policy Research Institute, a non-partisan public-policy think tank.