July 22, 2019; Reno Gazette Journal
“Is this the bill of goods we’ve been sold?”
Such was the reaction, reports James DeHaven in the Reno Gazette Journal, of one state lawmaker—Assemblywoman Teresa Benitez-Thompson, D-Reno—after reviewing a state audit that showed scores of companies failed to deliver on promised jobs and new investments they promised in exchange for state tax abatements. The companies involved include some of the largest in business, including Tesla, Amazon, and Apple.
As DeHaven explains, many state legislators in Nevada “have found it increasingly hard to justify showering subsidies on multibillion-dollar corporations.”
They fear some companies already aided by the state have inflated employee salaries and double-dipped in the pool of taxpayer handouts, even while failing to provide promised economic benefits.
DeHaven adds, “A Reno Gazette Journal analysis of public records show they’re right,” pointing out that “audits conducted by state tax officials reveal companies that received tax abatements through GOED [Governor’s Office of Economic Development] generated, at most, 80 percent of the jobs—and less than 30 percent of the capital investment” that companies promised, with nearly two-thirds of applications approved by the agency failing to meet at least one of the benchmarks to collect an abatement in the first place.
In particular, the Reno Gazette Journal found:
- Some 37 percent of Nevada’s 284 tax abatement applications did not offer employees the statewide average wage.
- At least 22 companies fell short of capital investment requirements.
- Another 51 companies of 284 failed to create the minimum number of new jobs needed to collect a tax abatement.
DeHaven notes that the state provided $393 million in abatements that were supposed to result in 19,900 “high-paying jobs” and at least $7.1 billion in new capital investment, but only got 15,732 jobs and $1.9 billion in investment.
DeHaven adds that, “The agency’s latest report to lawmakers shows it was prepared to hand over an average of $88,611 for every job companies said they would create through abatements over the past 10 years.”
In some cases, the abatement payments are even greater. Apple, for example, “received almost $1.6 million in tax breaks for every job created at its Reno warehouse. The average wage paid to the warehouse’s 35 workers was $25 per hour.” The firm eBay got approved for $13.6 million for an expansion of its data center that brought two jobs. Switch, a Las Vegas-based data center company, got $54.7 million, about $693,000 for each of the 79 jobs the company pledged to create, DeHaven indicates.
Nevada’s governor, Democrat Steve Sisolak, has gone on record supporting the idea that the state “review and revise” its approach to tax breaks. Keith Paul, GOED’s spokesman, wrote in an email to the Reno Gazette Journal that, “We look forward to working with the governor’s office on reshaping GOED and its priorities, so they better fit the current economic landscape.”
DeHaven adds that many GOED reformers would like to see an agency oversight board put in. These reformers expect to revive their push for that board to be created in 2021.—Steve Dubb