Nevada Senate approves biggest chunk of Tesla’s $1.3 billion incentive package

By , on September 12, 2014

Headquarters of Tesla Motors Inc., located in Palo Alto, CA, USA. Photo by Tumbenhaur / Wikimedia Commons.
Headquarters of Tesla Motors Inc., located in Palo Alto, CA, USA. Photo by Tumbenhaur / Wikimedia Commons.

CARSON CITY, Nev.—The Nevada Senate unanimously approved the biggest chunk of an unprecedented package Thursday to give Tesla Motors up to $1.3 billion in tax credits and other incentives to bring the electric-car maker’s $5 billion battery factory to the state, and the Assembly was preparing to do the same.

On a 21-0 vote, senators passed to the Assembly a bill with up to $1.1 billion in tax abatements for Tesla’s “gigafactory.” One lawmaker said it would be the biggest thing to hit Nevada since the building of the Hoover Dam during the Great Depression.

California-based Tesla would pay no property taxes or payroll taxes for up to 10 years and no local sales or use taxes for up to 20 years under the bill that Assembly Speaker Marilyn Kirkpatrick, D-Las Vegas, said she expected would receive final approval and be sent to Republican Gov. Brian Sandoval for his signature Thursday night.

“It’s the heart and soul of the legislation that is going to get Tesla here,” Sen. Mark Hutchison, R-Las Vegas, said immediately after the Senate vote at 5:58 p.m. “Everybody knows how important this is for the state of Nevada.”

The Senate also approved and sent to the governor two smaller bills the Assembly passed earlier Thursday providing Tesla discounted electricity and ending a $25 million annual subsidy for insurance companies to help pay for Tesla’s tax credits.

The factory planned at an industrial park along Interstate 80 about 15 miles east of Sparks is expected to help create more than 20,000 jobs and inject up to $100 billion into the state’s economy over the next 20 years.

“This is arguably the biggest thing that has happened in Nevada since at least the Hoover Dam,” said Assemblyman Ira Hansen, R-Sparks.

Under the agreement, Tesla would have to spend $3.5 billion in the state within 10 years. It also mandates half the jobs go to Nevada residents, at both the factory expected to employ 6,000-plus and among the 3,000 projected construction jobs.

“This really is the definition of the rising tide lifting all boats,” said Steve Hill, director of the Governor’s Office of Economic Development. “It wasn’t that long ago we were suffering through one of the worst recessions in Nevada history with 14.5 per cent unemployment.”

Earlier Thursday, several Senate Democrats objected to Sandoval’s plan to cut all but $10 million from an $80 million program the last Legislature approved providing tax credits to the motion picture industry. That $70 million combined with the $125 million from the home insurance office credit would offset a total of $195 million in Tesla tax credits.

“I think it sets a dangerous precedent when we passed the program in the Legislature and then in just seven months, we just wipe it out,” said Sen. Pat Spearman, D-North Las Vegas. “What if another shiny object comes along?”

But in the end, no one voted against the measure.

A fourth and final bill still be considered—and expected to pass—would make clear it is legal for Tesla to sell the cars it manufactures at dealerships it owns in Nevada. That had been a sticking point in Texas, which along with California, Arizona and New Mexico had competed with Nevada for the plant.

Some of the public comment before the votes questioned why such a big company needs such a big handout from taxpayers.

“I think it is kind of ironic that a renewable energy, a green energy car company we are courting to come to our state, that one of the things we are giving them is free energy,” said Angie Sullivan, a Las Vegas schoolteacher.

“Nobody pays my electric bill,” she said. “I think they are taking advantage of my state when we have limited funds.”