Sandoval signs off on$1.3 billion untax package
Carole Vilardo stalked the legislative halls during the special session of the Nevada Legislature. She represents the Nevada Taxpayers Association, a business group. Except possibly—and only possibly—for state budget directors, she knows more about state taxation than anyone.
One of her concerns with the Tesla deal was that green energy abatements have a history in Nevada, and they were not always successful. She recalled one abatement that was created in the early days of energy alternatives when the state was trying to encourage their use. An abatement was provided on the assumption that businesses would use it for their buildings. One casino used it for its entire footprint—parking lots and all—and ate up most of the abatement provided. Drafting legislation can be tricky.
So can the makeup of the legislature. Term limits have seldom had an impact because there is such heavy turnover. Few legislators stay long enough to be termed out. This means that there are few legislators who have much knowledge of how past legislation was handled. That casino eating up most of an abatement is institutional knowledge that few people—least of all legislators—have. So Vilardo was putting it in their ears.
“A lot of these legislators have been spoken to about it.” she said. “I know because I have done some of it.”
That was her principal concern with the Tesla deal. If that was handled, she was satisfied.
That was true of most players at the special session. Their main interest was to tinker with the deal, not to stop it or alter it significantly. With northern journalists serving as cheerleaders, little scrutiny had been done and so the public had only a rosy projection of what the Tesla deal meant. In the handful of hours after the deal was announced and before the legislators went into special session, the two Las Vegas dailies quickly turned out some rigorous analysis of the Tesla deal, but by then the juggernaut was rolling.
Gov. Brian Sandoval worked hard to keep the public from being involved and a debate from getting started. The negotiations with Tesla were secret. Once the governor announced the deal, he raced to get the lawmakers into special session as fast as possible so critics would not get traction and debate would not get underway. The actual language of the legislation was not available for the public to examine until the last possible moment. Indeed, the governor didn’t get around to actually calling the legislators into session until the night before they met, when many of them had already arrived. Since the governor’s call to the legislators contains the legislative agenda, the agenda, too, was withheld from the public. Information was held closely, preventing anyone from raising questions or slowing things down.
Once the legislative session was underway, a good deal of work was done in political party caucuses barred to the public.
The governor suggested there was nothing to debate, a notion seconded by supporters of the Sandoval deal like Washoe County Commissioner Marsha Berkbigler, who said, “I can’t see a downside to it” on Nevada Newsmakers. When there was rare scrutiny by journalists, Tesla backers complained. Assemblymember James Hardy of Clark County, a Democrat, complained that the press was misrepresenting the legislation as Tesla-specific, and columnist Steve Sebelius answered him that Tesla was the only corporation that would be affected by two provisions in the then-existing bill drafts, and Tesla was getting its own $103 million highway built for it by the state.
Tesla itself had five lobbyists registered, though there may have been others behind beards like public relations firms. They kept their heads down to avoid giving anyone a target.
There were plenty of lobbyists representing other entities. Water districts and private water corporations, chambers of commerce, the Burning Man festival, teachers, real estate salespeople, contractors, the state’s courts, hospitals, vineyards, law enforcement and casinos all had their lobbyists on hand.
So did the automotive world, including General Motors and the Alliance of Automobile Manufacturers. And so did insurance companies and theatrical production people, who were directly affected, their existing corporate welfare reduced to help pay off Tesla.
Democrats, who early on had talked tough and skeptical about corporate welfare, ended up fighting to protect a slightly larger portion of welfare for the film industry that was supposed to go to Tesla.
Most of the lobbyists were there to watch and report back to their clients. Only a few felt any direct impact, but the implications of the legislation were sweeping, so they needed to be on hand. They’ll be affected down the road.
Though nowhere near the size of the Hoover Dam project—some legislators have made the comparison—the Tesla plant will likely trigger a growth spurt unlike any this region has seen since the summer of 1978, when, in a dazzling display of bad municipal planning, six new casinos opened in Reno. People poured in from around the nation looking for jobs, which were plentiful—indeed, some could work two or three jobs, and did—but there were few places to live and the sewage treatment plant was running out of capacity and had to be expanded by a quick bond issue. People lived in their cars or at a roadside rest stop east of Sparks. Traffic problems became endemic. The impact hit the valley like a sledgehammer and overnight a controlled growth faction gained legitimacy and public office. So real estate and developer lobbyists had a lot to watch last week.
The people imported to work at Tesla will put new strain on water and schools. The workers are expected to live mostly in Washoe County and Fernley in Lyon County. While taking out $1.25 billion in abatements, Tesla will put $7.5 million in for schools, which is not expected to come close to paying its way. Lawmakers sought to guarantee that half the hirings would be of local residents, but lawyers who specialize in employment law said such a provision would be unlikely to survive court scrutiny. One said citizens are free to cross state borders in their search for work and must be treated equally and not burdened in their search for work by local laws. The principal case law in the field involves government employees, not private workers—though given the federal and state funding tied up in Tesla, it’s difficult to determine which applies here.
A few legislators like Richard Segerblom of Clark County noted that the state never has money for things like schools but manages to find mammoth abatements for Tesla. Labor unions who sought wages at the prevailing regional level failed.
Sen. Joe Hardy got attention for saying of Storey County’s rapid local approval of Tesla, “That’s a lesson we could learn in southern Nevada.” The fact is, if Tesla had said it wanted to manufacture meth, the county might have waved them through just as quickly. Nevada’s small counties are notorious for approving dirty industries, as with a one time Lincoln County plan to allow two hazardous waste incinerator projects to be built (subsequently disallowed by the state) or Nye County’s willingness to welcome the now-defunct Yucca Mountain high level nuclear waste dump.
Given that one of Gov. Sandoval’s goals was to increase Nevada’s credibility in attracting new companies to Nevada, the reaction may not have been what he anticipated. The special session’s work was denounced in the major organs of the financial community, such as the Wall Street Journal, Business Insider and Forbes.