Take the money and stay

If a corporation’s net income in the second quarter of this year was $11 billion, and it had a cash reserve of $257 billion, shouldn’t the corporation be able to afford its state and local taxes? Apparently not if its name is Apple.

Two courageous elected officials said “no” to corporate welfare recently, refusing to support a continuing multi-million dollar subsidy of one of the wealthiest corporations the world has ever seen. They received eye rolls and barely hidden contempt for their principled stand from many who think attracting an Apple warehouse is a tremendous coup for the Reno economy.

First, the Washoe County School Board took up an amendment to a prior agreement with Apple, allowing the company to purchase land to build a warehouse of 17,000 square feet in the Tessera “Tourist Improvement District,” even though the warehouse hardly meets the definition of a tourist attraction. But the deal allows Apple to store large amounts of data center equipment in downtown Reno while avoiding paying millions in taxes to state and local government. Tourists can go elsewhere for their entertainment needs.

Veronica Frenkel was the only school board member who voted against the new deal. She offered a detailed explanation of her position, complaining about the new taxes residents are paying for the privilege of educating Apple’s future consumers. “Since 2012, Reno citizens and businesses have been asked to step up and shoulder the burden of supporting education in our community, first with the passage of the Commerce Tax in 2015, a tax on businesses specifically to support education, and most recently with the passage of WC-1, which has meant that since April all of us, including those with limited resources, have and will continue to pay higher sales taxes in support of school construction and educating our children.

“Later in this agenda we are addressing a budget deficit and the challenge of paying for the quality education that our 64,000 students deserve. I, for one, am not comfortable exempting any business coming into our community from shouldering its fair share of the tax burden and from its responsibility to contribute to the education of our children, especially as other businesses and as all the citizens of our community have been asked to bear them.”

The next day, Reno Councilmember Jenny Brekhus also said no to Apple. She pointed out the Council had an opportunity to “unwind this pattern of giveaways” and worried about the inability of the City’s budget to maintain infrastructure for a growing population. Brekhus noted, “Reno has about 21,000 more residents since 2010 but approximately 60 fewer sworn police officers. Nearly one out of every five local roads is in a failure status. The fiscal health of local governments seem to not be calculated into the State of Nevada economic development policies that are promoting economic activity and accompanying growth. We have $5 million less in property tax than in 2010, and, when Reno and other local governments bring this up to those in Carson City, it falls on deaf ears. Our residents are also struggling with increased utility rates, tax increases and escalating housing rental prices.”

Brekhus urged her colleagues to at least put metrics for performance into the deal, citing a new report from the Pew Charitable Trusts that criticized the failure of many states, including Nevada, to effectively evaluate the economic benefits generated by massive tax breaks. The report noted Nevada’s “supersize incentive deals with businesses in recent years” despite the lack of “a process to regularly evaluate them.”

But no worries, Reno. The City’s tough negotiations with Apple resulted in an agreement to add signage to the warehouse property, visibility Apple usually avoids. The sign will provide a daily reminder of the folly of allowing super-rich corporations to dodge their taxes.