If you thought the debate over the Tesla Motors incentive package was going to be about the Really Big Questions, you might have overestimated the Nevada Legislature.
Although the deal stands to take money directly out of the state’s general fund at a time when Nevada is struggling to keep its budget balanced and reform its school system, nobody really asked whether the state ought to take a pass on the $1.3 billion incentive bill for a company with a $34.7 billion market capitalization.
Instead, much of Thursday’s debate in the state Senate centered on an $80 million film tax credit program that was created in 2013 and has thus far received only five applications, all of which have been granted, state officials say. But the credit’s author, Sen. Aaron Ford, D-Las Vegas, objected strongly to taking all but $10 million from the program in order to pay for the Tesla deal.
Ford maintains the credit — which is popular with organized labor — has created new jobs in the film industry and ancillary businesses, and that those jobs would be in jeopardy now. “What am I going to tell an industry that we’re trying to invite here? Psych? Just kidding?” Ford asked Steve Hill, the director of the Governor’s Office of Economic Development.
But Hill, answering questions from Ford and Sen. Patricia Spearman, D-North Las Vegas, didn’t give any ground. He noted that only five productions had applied for the credit since it was launched, eating up $5.9 million of the authorized $80 million. Because $10 million would be left in the program, film productions could still apply until the program comes up for debate again in the 2015 Legislature.
“We also frankly expected it to be more active than it has been,” Hill said.
Not only that, Hill said, but the return on investment, per job, from Tesla’s tax credit is a much better deal for the state than are the credits for film production or those in a program that helps insurance companies that locate in Nevada, which is also being eliminated.
More relevant in this week’s special session was another issue Democrats raised: money to build schools. Tesla, after all, says it will bring 6,500 jobs to Storey County. And schools in nearby Washoe County are nearly full, said Sen. Debbie Smith, D-Sparks. Although Tesla agreed to pay a total of $37 million over five years for K-12 education, it won’t pay the property taxes that fund local schools for 10 years, and it won’t pay the sales taxes that go to state education coffers for 20 years. (The $37 million is meant to make up for the missing property tax.)
“When you look down the road two years, people are going to be screaming,” Smith said. “I’m not going to rest on this. … This is one thing we are not going to get done if we don’t pay attention to it.”
Hill sympathized with Smith’s concern, although state officials made no move to actually address it with legislation. “There’s a lot of work ahead,” Hill said. “And I know that. We need to make sure this [project] works for Nevada.”
But if you wanted to hear somebody in elected office stand up and say Nevada simply can’t afford a gigantic giveaway for a battery factory when its two most populous counties refused to approve tax increases to build and repair schools, when it lacks the political will to fund education at the national average, when the state has been caught red-handed giving mentally ill people a bus ticket instead of appropriate care, well, you’d be disappointed.
Even the liberal Progressive Leadership Alliance of Nevada only urged the Legislature to make sure Tesla paid good wages to its workers, to give Nevada workers preference (which the Senate’s bill does) and perhaps roll back some of the generous benefits. And the conservative Nevada Policy Research Institute testified as “neutral,” albeit quite skeptical.
Instead, the reactions ranged from cheerleading for the deal to complaints about how the state had chosen to pay for it. Once more, the Really Big Questions went unasked and unanswered.
Steve Sebelius is a Las Vegas Review-Journal political columnist who blogs at SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at 702-387-5276 or email@example.com.