Bill limiting executive agency power over tax abatements likely to change
Amid full-throated opposition from executive branch officials last week to a bill seeking to eliminate the Governor’s Office of Economic Development (GOED) board’s power to issue tax abatements worth more than $500,000, Sen. Dina Neal (D-North Las Vegas) called the measure “absolutely unworkable.”
During a Thursday Assembly Revenue Committee hearing on the bill, Neal acknowledged the $500,000 was arbitrary and said she brought forward SB394 not to hamper the agency’s economic development efforts, but to force an examination of the power delegated to the GOED board and have a conversation about the Legislature’s potential role in the tax abatement process.
She added that she did not believe the current language of the bill should “be the form that exits this building,” and asked to work with the committee on changes to the bill, such as increasing the proposed $500,000 threshold, which she described as “super low.”
“I'm not here to completely neutralize GOED and to make it an ineffective agency that no longer has a particular tool,” Neal said. “I wanted to use the bill as a vehicle to have this conversation about what is now the appropriate balance of power … I don't want to be sitting in the seat where I find out about the abatement, and I have no say in it.”
Neal has been a vocal critic of large-scale tax abatements given to major companies and her push to change the tax abatement process comes after the GOED board in March approved a set of abatements for Tesla totaling $330 million.
Under the existing structure, which was established with the creation of GOED in 2011 under then-Gov. Brian Sandoval, companies can apply for tax abatements after meeting numerous requirements based on capital investment, workforce makeup, employee pay and more, and the GOED board is then responsible for approving the abatements — with no legislative oversight. Gov. Joe Lombardo has publicly supported that process, alongside Republican lawmakers who have argued the process allows GOED to more quickly advance economic diversification goals.
On Thursday, the bill faced a sharp rebuke from business groups and economic development leaders in Nevada, including GOED Director Tom Burns, who said that “just having this hearing has devastating and dire consequences,” signaling “to the entire business community locally, nationally, internationally, that the legislative body does not support businesses moving here.”
“As it happened in California, Nevada businesses will continue to be refugees to other states, including Texas, Utah and Arizona,” he said, emphasizing that the tax abatements are incentives needed to attract businesses to the state.
Madeline Burak, Lombardo’s legislative director, testified in opposition to the bill, describing it as “the antithesis of making businesses feel welcome.”
Burns said that since 2012, GOED has issued $2.4 billion in tax incentives for 266 companies, which have generated $5.8 billion in new tax revenue.
SB394 passed out of the Senate on a 14-7 vote, with Sen. Ira Hansen (R-Sparks) joining Democrats in support of the measure, as he argued the incentives were unnecessary for large businesses capable of moving into the state without tax breaks.