Lawmaker: Colleagues to scrutinize Tesla deal

MARTIN GRIFFITH
Associated Press

RENO, Nev. (AP) — Nevada Assembly Speaker Marilyn Kirkpatrick says it’s too early to say whether a huge package of tax breaks and incentives needed to land Tesla Motors Inc.’s lithium battery factory will have smooth sailing at a special legislative session next week.

The North Las Vegas Democrat said Friday that she and her colleagues must scrutinize details of the legislation before voting on state incentives that could total $1.3 billion in costs over 20 years.

Kirkpatrick’s comments came a day after Tesla CEO Elon Musk declared Nevada the winner of a high-stakes battle with California and three other states for the $5 billion “gigafactory,” which will mass-produce cheaper batteries for its next line of more-affordable electric cars.

The deal has prompted concerns from both conservative and liberal groups in the Silver State.

“I have had many conversations with legislators. They need enough time to look at it to get their questions answered,” Kirkpatrick told The Associated Press. “Everybody is open-minded about looking at the legislation and excited to have it on the forefront. But we have to do due diligence to make sure the things we want are in there.”

Democrats, who control both houses of the Legislature, want to ensure Nevada workers get first crack at jobs as well as “decent” wages and health care coverage, Kirkpatrick said. They also want to ensure Tesla is held accountable if it fails to meet its goals.

“Accountability is everything,” she said. “We don’t mind incentives. But if they don’t meet requirements, we need to get a return on our investment.”

Legislative leaders are gearing up to start the special session Wednesday, she said, and its length will depend on questions raised by the legislation. The public will be given a chance to testify during the session.

“The hope is the special session will last one day. But I think it’s important to have as much input from the public as possible because this is a big deal,” Kirkpatrick said. “I don’t want to rush the thing. I want to spend as much time to go over it so legislators have a chance to make a thoughtful decision.”

Senate Majority Leader Mo Denis, D-Las Vegas, and Republican legislative leaders did not immediately respond to messages for comment Friday.

State Sen. Tick Segerblom, D-Las Vegas, said he supports the deal.

“It’s a lot of money, but all-in-all, it’s positive for the state,” he said, adding Tesla employees used to high-quality schools in Silicon Valley could push low-ranking Nevada schools to improve.

Republican Gov. Brian Sandoval, in announcing the deal Thursday, asserted the factory east of Reno would create more than 22,000 new jobs and pump $100 billion into the state’s economy over the next 20 years.

But Bob Fulkerson, director of the Progressive Leadership Alliance of Nevada, said he was incredulous of the economic studies cited in the announcement, noting project promoters have an incentive to cite rosy numbers.

“They talked about an 80-to-1 ripple effect to this,” he said. “There’s no way there can be that kind of a ripple effect. What are the assumptions behind that?”

Fulkerson said he hoped citizens could vet the plan and wondered whether there would be time for an independent analysis of the economic claims. “We’re supposed to be taxpayers on this, not observers of a deal that was already made,” he said.

Representatives of the Nevada Policy Research Institute, a conservative think tank, said they’re carefully screening the plan.

“It’s really important that lawmakers don’t get caught up in the euphoria of this and ram it through,” said Andy Matthews, the institute’s president. “They need to make sure it’s going to be good for the state of Nevada.”

“It’s an opportunity for real discussion about whether it makes sense to give so much away to a single company,” Matthews added. “If you’ve been here for decades, you’re paying taxes, you’re saying, ‘Why them and not me?’ “

The partnership between Nevada and Tesla is “a bold move” that could be a model for future deals if it succeeds, said Joe Harpaz, a tax analyst with Thomson Reuters. The $1.3 billion tax incentive under the deal would be the 11th largest nationwide, he added.

“While history is littered with examples of government incentives for private companies that failed — Solyndra is probably the best recent example — we’ve also seen countless successes with well-executed tax incentive programs,” Harpaz said, pointing to BMW, Honda, Hyundai and Mercedes factories that have revitalized the manufacturing sector in the South. “The Nevada/Tesla program is a classic example of risk and reward: the bigger the risk, the bigger the potential upside . and downside.”