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Nevada Lawmakers Unanimously Approve $1.3 Billion In Tax Breaks For Tesla 'Gigafactory'

CARSON CITY, Nev. (CBS / AP) -- An unprecedented package of economic incentives to bring Tesla Motors' $5 billion lithium battery factory to Nevada won unanimous approval from the state Legislature late Thursday and Gov. Brian Sandoval was preparing to quickly sign it into law.

The package of tax credits and other incentives worth up to $1.3 billion seals the deal Sandoval and Tesla CEO Elon Musk announced last week when the Republican governor announced he would call the Democratically-controlled Legislature into a special session to make sure the electric-car maker's "gigafactory" lands in Nevada.

Sandoval said it would help pull Nevada from the worst economic crisis in state history. One lawmaker said it will be the biggest thing to hit Nevada since the building of the Hoover Dam during the Great Depression.

Sandoval said the plant planned east of Sparks is expected to produce up to 22,000 jobs and inject up to $100 billion in Nevada's economy over the next 20 years.

"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 percent unemployment."(backslash)

The Legislature adjourned shortly after passage and the governor was expected to sign the package around 10 p.m. PDT.

Under the biggest piece of the package providing up to $1.1 billion in tax abatements, 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. Another $195 million in tax credits also were approved.

"Everybody knows how important this is for the state of Nevada," said Sen. Mark Hutchison, R-Las Vegas.

Under an agreement Sandoval and others negotiated with Tesla for nearly a year, the company 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 at the site in at Tahoe Reno Industrial Center along U.S. Interstate 80 about 15 miles east of Sparks.

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

Lawmakers also gave final approval to three other bills, one discounting electricity for Tesla and another ending a $25 million annual subsidy -- $125 million over five years -- for insurance companies to help pay for Tesla's tax credits.

The last bill made it 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.

Like the big tax abatement bill, each of those measures passed on votes of 21-0 in the Senate and 39-0 in the Assembly.

Some of the public comment Thursday 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."

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.

© Copyright 2014 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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