Nevada lawmakers yet to reach decision on Tesla plant

Nevada lawmakers yet to reach decision on Tesla plant - (Photo: Al Behrman AP)

Ray Hagar, Reno Gazette-Journal

Nevada’s Legislature resolved some issues, but disagreed on others as it convened Wednesday to decide whether to endorse a $1.25 billion deal to bring Tesla Motors’ battery “Gigafactory” to a site outside Reno.As a result, lawmakers broke for the evening without having voted on bills related to Tesla’s $4-billion to $5-billion factory, which would create up to 6,500 jobs.

One of the most contentious issues was objections by Senate Democrats to Gov. Brian Sandoval’s plan to slice $70 million out of a movie-production tax abatement program passed in the 2013 Legislature and switch it to the Tesla deal.

“That’s a tough one for my caucus,” said Sen. Debbie Smith, a Democrat from the Reno suburb of Sparks and the chair of the Senate Finance Committee. “A lot of time and effort was spent on it in the last legislative session and it has only been in effect for nine months and we are already dialing it back? It does not send a very positive message to the film industry.”

Nevada’s franchised auto dealers agreed not to stand in the way of a plan to allow Tesla to sell its electric-cars “factory direct” to Nevada consumers. The issue of selling the cars through franchised auto dealers was a major sticking point in negotiations with Texas and Arizona to locate the Gigafactory in those states, according to news reports. California and New Mexico also bid for the project.

“My car dealers want to assist in any way they can,” lobbyist John Sande of Reno, representing the Nevada Franchised Auto Dealers Association, said. “Nevada law does not allow Tesla to come in and sell direct to the consumer, so we are going to have come in and change it so they can sell direct to the consumer.”

Also, the Nevada insurance industry won’t object to a plan to strip it of about $27 million in tax breaks for companies that have offices in Nevada. Nevada insurance companies who have offices in Nevada have received the tax break since at least 1971, said longtime insurance lobbyist Jim Wadhams.

Now, however, it appears that tax break will be eliminated and the $27 million it produces for the insurance industry will now become part of Tesla’s tax abatement program.

“We think this is a great thing for Nevada to have the Gigafactory come in, jobs and the like,” Wadhams said. “But we would expect the Legislature at some point would revisit this issue.”

Wadhams warned that insurance companies may shutter their Nevada offices if the tax break is lost. They could instead service Nevada accounts from out-of-state offices.

Assemblyman Skip Daly, D-Sparks, also wants Tesla to adhere to a prevailing wage scale for the construction workers who build the gigafactory. Daly and other Democrats also want to make sure that Nevada workers are hired for construction of the facility and as employees of the gigafactory.

State law requires prevailing wage scales to be used in public works projects but does not usually cover privately-funded projects.

Republicans are opposed to forcing Tesla to adhere to paying a prevailing-wage scale.

“This is a public-private partnership and no direct public dollars are going into the construction of the site,” said Assembly Minority Leader Pat Hickey, R-Reno.