Betting on the come line
True to her nature, Nevada is set to embark on a huge gamble by embracing the dream of economic prosperity propagated by a new and unproven mass-produced technology.
Amid much fanfare, Gov. Brian Sandoval announced last week that Nevada had won the right to offer Tesla, a private company specializing in the development of electric cars, the 10th largest taxpayer subsidy in U.S. history to build its battery factory in Nevada: close to $1.3 billion.
In an only-in-Nevada twist, one of the individuals who will profit the most from the “mega-deal” is brothel owner Lance Gilman, as he and his partners earn a cool $43 million thanks to Nevada taxpayers’ purchase of the right of way of USA Parkway in front of their Industrial Park. As part of the Tesla deal, Gilman and his cohorts will be further enriched when the state extends the road to U.S. 50, costing taxpayers about $50 million more, to provide easier workforce access to the industrial park and Gilman’s nearby brothel.
It’s hard to say which is the most offensive tax break in the massive giveaway. Is it the sales tax and property tax that won’t go to our schools, which desperately need more money, not less? Is it the $195 million in tax credits Tesla will sell at a discount to other businesses, a cash windfall for its shareholders? Or is it the “charitable contribution” (and corresponding tax write-off) of $37 million over five years to the state’s Distributive School Account, meant to deflect criticism of the millions lost by granting Tesla 20 years of avoiding sales tax and 10 years of relief from property and payroll taxes?
One does have to smile at the early demise of the film industry’s tax bonanza, approved just last year, to help pay for Tesla’s tax credits. Apparently the phantom Hollywood jobs were no match for the Tesla battery assembly line as Sandoval slashed the $80 million giveaway to $10 million, awarding the $70 million saved to Tesla instead. Easy come, easy go. Right, Nic Cage?
Another surprise was the elimination of a $125 million tax break to insurance companies who locate their home offices in Nevada, something Democrats repeatedly tried to take away during the recession to help balance the budget, but were consistently thwarted by the Republican leadership. Tesla wins again.
There was lots of bragging about Tesla’s 6,500 new jobs that will require expertise in science, technology, engineering and math. However, there was no talk about how Washoe County, future home of most of the workforce, will produce these employees from its overcrowded and crumbling schools.
The giddy economic development officials promise an 80-to-1 return on Nevada’s investment of $1.25 billion over the next 20 years, an imagined economic impact of $100 billion, ignoring the plethora of national business experts who scoff at that figure.
As the Legislature meets this week to consider the deal, which was negotiated in secret. Let’s hope legislators ask the right questions. After all, their constituents are quite familiar with recent empty promises of corporate welfare personified by the Aces ballpark fiasco or the largest corporate subsidy in the state’s history, the $89 million Apple giveaway.
Legislators will surely approve the gargantuan gift to Tesla from Nevada taxpayers after a few face-saving moments to prove due diligence and their negotiating skill, leaving the rest of us to wonder why there’s always millions available for the shareholders of private companies but never enough for our schools.
Tesla promotes itself as a clean energy company of the future and promises to diversify Nevada’s economy and enrich us, though no one knows if they’ll succeed. But we do know that we won’t be gambling with the stockholders’ fortune; we’ll be gambling with our own.