Everyone knows it’s a charade
Eight years ago when we ran a cover story about Sales Tax Anticipated Revenue (STAR) bonds (“Death STAR,” April 23, 2009), local business owner Marty Piccinini told us we were too late, that the law had been enacted years earlier, and he had tried to get journalists interested then without success. “I objected, and nobody wanted to listen,” Piccinini said.
Here’s the way STAR bonds work: If a businessperson convinces a local governing body his or her business will draw tourists to Nevada, the company can keep three fourths of the sales taxes it generates. That’s the deal Cabela’s in Reno and Scheels in Sparks got. Local governments brought the two corporations to the valley after they presented “studies” showing they could bring tourists to Nevada. They don’t really have to actually bring tourists. They just have to cook up studies saying they will. When the tourists fail to come, the corporation still gets to keep the money.
Let’s face it. No one really believed tourists would come to see these stores. And as anyone who has walked through their parking lots counting license plates knows, it didn’t happen. But officials wanted to be deceived, so they read the studies, nodded solemnly, and voted for the deals. If any children are reading this, keep this in mind for when you grow up, that lies are common currency in business. In a tourist town, elected officials went out of their way to be lied to, and said they believed the sham studies.
There is no remedy for this, by the way. The Nevada Legislature carefully wrote the law to avoid accountability. When tourists fail to come, nothing happens. The corporations still walk away with other people’s money.
In this past week, another journalist has reported on a variant on this cockamamie scam. Anjeanette Damon reported that through a Tourism Improvement District, Apple Computers will get an abatement of nearly all its sales taxes, even though the corporation’s planned facilities will do nothing for tourism. That’s when she mentioned the way those “studies” don’t have to be valid. Just run them under the eyes of the elected officials, hungry to be lied to, and you’re home free. We’re not clear how the law allows abatement of more than three fourths of the sales tax, but it probably doesn’t matter. In for a dime, in for a dollar.
People have been counting license plates in Cabela’s stores around the country for years. Never have the taxpayers anywhere gotten their money’s worth for this kind of sanity-challenged fraud. But it keeps working in market after market. Cabela’s would not exist without welfare.
In spite of the fact that Bob Cashell, Geno Martini and their colleagues on the city councils did their best to drive Marty Piccinini out of business by paying big box stores to come to the valley, he has hung on, kept his Mark Fore & Strike Sporting Goods in business against the corporate eyesores. Last month, Northern Nevada Business Weekly did a story on MF&S’s first half century. We wish Piccinini and his operation well and we also wish his most recent years had not been so tough.
We’re also sorry that taxpayers have it so hard, thanks to these shakedowns.