Lawmakers poised to review $1.3B Tesla package

A banner welcoming Tesla to Nevada is hung on the US Bank building just south of the downtown Reno casino district on Tuesday, Sept. 9, 2014, in Renvo, Nev. State lawmakers planned to meet in a special legislative session in Carson City on Wednesday to consider a package of tax breaks and incentives worth up to $1.3 billion to seal a deal to bring the electric car maker's $5 billion lithium battery "gigafactory'' to an industrial park in the state. (AP Photo/Scott Sonner)

RENO, Nev. (AP) — Gov. Brian Sandoval was poised to call state lawmakers into a special session Wednesday to consider an extraordinary package of tax breaks and incentives worth up to $1.3 billion to seal a deal with Tesla Motors Inc. to build a $5 billion factory in Nevada to make batteries for electric cars.

Sandoval told legislative leaders and others last week that the plant and its 6,500 workers would generate more than 20,000 construction and other related jobs and up to $100 billion for Nevada’s economy over the next 20 years — a return on investment he estimated to be $80 for every $1 the state spends.

Little public opposition has emerged among lawmakers since Tesla CEO Elon Musk announced alongside Sandoval on the Capitol steps Thursday that Nevada had beat out California, Texas, Arizona and New Mexico for the factory expected to open east of Sparks in 2017.

Aides to the Republican governor said they expected the session to begin at noon Wednesday, but by 10 p.m. Tuesday he still had not issued the formal proclamation to authorize the legislative work expected to take up to three days.

Sandoval’s spokeswoman Mari St. Martin did not respond to repeated telephone calls or emails seeking comment during the day and into Tuesday night.

Assembly Minority Leader Pat Hickey, R-Reno, said his caucus had briefings scheduled with the governor’s staff Tuesday night.

“We’re getting ready for an all-nighter if necessary,” Hickey said. “How long it is going to take is anybody’s guess.”

Rick Combs, director of the Legislative Counsel Bureau, said he still expected the formal order to be signed late Tuesday but had not received any indication when that might happen.

“Bills are in the drafting stage and we have been told to expect a special session” Wednesday, he told The Associated Press.

Longtime Las Vegas reporter and political commentator Jon Ralston reported on his website Ralston Reports that the proclamation had been delayed because other Nevada companies were making a last-ditch effort to secure a way to win sales tax breaks similar to those being offered Tesla as part of the pending special session.

And while it still hadn’t officially been called, lobbyists had registered to represent more than 30 companies and organizations at the special session, including labor unions, chambers of commerce, school districts, auto dealers, health care organizations, utilities, manufacturing and other trade groups, and even Black Rock City LLC — the organizers of the annual Burning Man counter-culture festival.

Assembly Speaker Marilyn Kirkpatrick of Las Vegas and other Democrats who control both legislative houses said one of their priorities would be to make sure the jobs go to Nevadans at prevailing wages. That shouldn’t be a problem at the factory where Tesla says hourly pay will average $25 or more, but it could be a sticking point with some Republicans regarding the estimated 3,000 construction jobs projected to build the plant.

Reno-Sparks area leaders took to local news shows Tuesday to promote the deal.

“I can’t see a downside to it,” Washoe County Commission Chairwoman Marsha Berkbigler told KRNV-TV’s “Nevada Newsmakers.”

Still, the prospects of such a huge corporate giveaway drew criticism outside the mainstream, with one of the state’s most liberal groups and one of its most conservative aligning in opposition to quick approval of the deal.

“Why isn’t it that easy to raise taxes to fund education?” asked Bob Fulkerson, executive director of the Progressive Leadership Alliance of Nevada who criticized the lack of transparency during the secret negotiations with Tesla.

The Nevada Policy Research Institute issued an extensive list of questions it said need to be answered before any deal is approved.

“Why is this happening so quickly?” the free-market think tank asked. “Why is the state creating a different set of rules for one company?”

Institute President Andy Matthews said the governor’s “rosy projections” came with no independent economic analysis.

“The governor, of course, will leave office no later than 2018, which means it will be taxpayers who are left holding the bag if all doesn’t go as planned,” Matthews said.

Assemblywoman Teresa Benitez-Thompson, D-Reno, chairwoman of the Government Affairs Committee, said she wants to make sure strings are attached to the tax benefits so Tesla has to give the money back if it fails to meet certain benchmarks.

Hickey said he’s confident lawmakers will hold the company accountable.

“Tesla doesn’t get any of these tax breaks until they have spent at least $3.5 billion in Nevada,” he told KOH Radio in Reno.

 

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