Did Nevada Lawmakers Get Hoodwinked by Tesla?

Or will the benefits dwarf the costs?


To understand the potential impact of the deal Nevada made to obtain a Tesla battery plant, it helps to know this unfortunately apocryphal story: In 1971, National Security Adviser Henry Kissinger went to China to meet with premier Chou En-Lai and pave the way for President Richard Nixon to visit the following year. As they discussed a variety of subjects, Kissinger supposedly asked what Chou thought of the French Revolution of 1789. Chou replied, “Too early to say.”

Well, it’s too early to say whether Nevada will derive actual long-term benefits from the “gigafactory” that Tesla will locate in a Storey County industrial park near Reno and brothels. Michael Hiltzik, a Pulitzer Prize-winner at the Los Angeles Times who also wrote a fine book on Hoover Dam (meaning he can at least find us on a map), began his analysis, “The state of Nevada, of all places, should understand the gambler’s adage about how if you can’t pick out the sucker at your card table, it’s you.” He pointed out that Tesla gets $1.25 billion in tax breaks and 20 years of exemptions, plus credits and discounts, while Nevada is on the hook for schools, roads and whatever else Tesla and its employees need.

To frame it another way, Las Vegans are dubious about stadium deals that involve government giveaways or givebacks, and have long doubted the wisdom of finding money for government services. But by signing off on the deal, the Legislature unanimously handed Tesla a lot of dough (or potential dough) that the state may not even have.

Then again, sometimes it’s important to go big. Nevada just did. To invoke another cliché: Governor Brian Sandoval, his administration and the Legislature acted in such a way as to change the game. But since Sandoval was and may again be a federal judge, he may want to remember a quote from Supreme Court Justice Oliver Wendell Holmes Jr.: “Great cases, like hard cases, make bad law.” The biggest laws the Legislature ever passed, in 1931, reduced the residency requirement for divorce from three months to six weeks and made most forms of gambling legal. These became law without fanfare and without any expectation that they would create what was then the new Nevada—or, as we now call it, the old Nevada.

Things are much different in 2014 than in 1931. Like it or not, Sandoval and the Legislature are now shouldering huge expectations. If it doesn’t work out, all involved will be associated with great failure. Of course, there’s also the possibility of the Tesla deal being a great success. If that turns out to be true, it would be a rare example of our state’s leaders doing what politicians should do (be visionary). But if Tesla flops, it will serve as an example of what politicians should never do (take a flier with our money).

One thing we can conclude for certain in the wake of this unprecedented deal: We learned once again how badly we need a full-time, or at least fuller-time, Legislature. To recap the process: The governor called a special session. Lawmakers arrived in Carson City and spent the day … waiting for the legislation. Then several lawmakers informed their Facebook friends that they planned to spend the night reading the legislation.

Keep in mind that, during a regular session, it’s impossible physically—and dangerous mentally—for a legislator to thoroughly read every single bill. To have what is essentially an all-night cram session before voting on a major piece of legislation is more dangerous to the state.

It would be easy to take the cynical approach and just assume that the less informed the Legislature was, the more likely it would be to go along. But lawmakers historically are understaffed, overworked and short on time—they’re often underprepared to vote on most bills.

Speaking of cynics, there are probably more than a few Southern Nevadans grousing that Northern Nevada always gets its way, that the governor wouldn’t have gone to this effort for Las Vegas. Except Tesla is in Silicon Valley; Northern Nevada makes more sense. We can argue about whether the governor favors the north in general, but he would have wanted Tesla if CEO Elon Musk had said he wanted to be in Las Vegas, Laughlin, Searchlight or anywhere else down south.

It is, however, reasonable to wonder whether Northern Nevada legislators would have voted for Tesla if the plan was to bring the plant here. Would they have demanded something in return? Would Southern Nevadans legislators have caved? Considering that the Democratic state Senate majority (which is overwhelmingly comprised of Southern Nevadans) somehow gave the top committee chairmanship—Finance—to a northerner, the answer isn’t difficult to guess. And if, as Hiltzik suggests, Nevada will have to pay for those schools and roads, will the money come from Northern Nevada or Southern Nevada? Will Southern Nevadans stick together if that issue arises?

If this was the Silver State’s version of the French Revolution, the answers to those questions should be clear a little sooner.

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