As Tesla abatement request looms, legislators ponder whether GOED has too much power

Tesla next week will appear before the Governor’s Office of Economic Development to request approval of a tax abatement package likely to be worth hundreds of millions of dollars over two decades. Because of nondisclosure agreements, details of the company’s request won’t be public until three days prior to that March 2 meeting.

In the meantime, a few lawmakers are vocalizing concerns with the process of approving tax abatements.

“I understand that we created the GOED board and we gave a lot of power to GOED,” said state Sen. Dina Neal (D-Clark). “But now there are conversations around: Is it too much power to abate the taxes of the state without legislative oversight?”

Neal made her comments Thursday during a meeting of the Senate Committee on Revenue and Economic Development, which she chairs, after a GOED presentation on their various tax abatement programs, which range from partial tax abatements for small businesses relocating to Nevada to extensive abatements available for major projects promising $3.5 billion in investments.

GOED Director Tom Burns, who was appointed by Republican Gov. Joe Lombardo last month, argued his department is able to move faster than the legislature — something that is needed when competing to attract businesses into the state.

GOED is able to approve incentive packages in a 90-day timespan, said Burns, and that is sometimes longer than companies are willing to wait.

“In states like Arizona and Idaho and Utah, (it) is not nearly that long to receive approval,” he added.

Neal suggested state lawmakers might be up for rethinking “the appropriate balance” of power.

“There might be some potential conversations this session in the future that examine that relationship and examine trying to figure out how to give the legislature a little bit more control over the purse, which is also tax, and how it’s generated, how it’s abated.”

State Sen. Fabian Doñate (D-Clark) expressed a similar sentiment.

“I understand the process of an NDA and some of the work you guys are doing,” he said, directing his comments to the GOED representatives. “It’s not a criticism toward your administration or to any one individual. I think it’s more so (criticism) of the process.”

The lack of full disclosure allowing for proper vetting warrants further discussion this session, Doñate added.

State Sen. Pat Spearman (D-Clark) commented that the issue at hand is “a very, very good reason why we ought to be having annual sessions.”

Nevada is one of just four states that meets biennially.

Democrats frustrated by lack of details

Neal and others on the senate committee asked GOED representatives for details on what Tesla will be asking for at their meeting next week, but Burns pointed to a non-disclosure agreement allowed by Nevada law.

Burns noted that some data have been released by the media.

The Current earlier this month reported that, if the value of new abatements is comparable to those for the existing factory, they could total hundreds of millions of dollars over a decade, effectively constituting the third largest assistance package in Nevada’s history, after the initial Tesla deal and the $750 million in public financing for what would become Allegiant Stadium.

Securing the new abatements will require no approval from Nevada legislators, instead going directly through the GOED board, which can follow the abatement provisions outlined in the bill that established the original Tesla deal.

State Sen. Heidi Seevers Gansert (R-Washoe) said that the Tesla tax abatements approved in 2014 had “far more than paid for themselves with revenue brought to the region.”

According to a report by Tesla and GOED, the original tax abatement package of $1.2 billion has brought to Nevada $6.2 billion dollars in capital expenditures or taxes and wages paid to the state.

“When Tesla came, TRIC expanded in ways that are unimaginable,” said Neal, referring to the Tahoe-Reno Industrial Center where the Tesla Giga Factory is located. “We know that. We see that. But there were also negative impacts. To the growth that could not be sustained by TRIC. Growth that could not be sustained by Washoe.”

Neal also noted that there have been conversations, particularly over the past two legislative sessions, about the impact of the megadeal on local counties whose tax revenue was abated significantly.