More tax breaks ahead for Tesla

Published: Feb. 2, 2023 at 5:14 PM PST
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RENO, Nev. (KOLO) - Last Monday during his state of the state address Governor Joe Lombardo made this announcement.

“I am looking forward to joining Elon Musk and the team at Tesla tomorrow when they unveil plans to build a brand new $3.5 Billion-dollar advanced manufacturing facility in northern Nevada for the company’s all-electric semi-trucks.”

That meeting did take place the next afternoon at the Tesla Giga Factory.

But the media was not invited. Details of the project have not been disclosed other than the factory will include a 4 million square-foot expansion on the campus located in Storey County.

Also not mentioned, will Musk receive the same tax breaks the state of Nevada granted the billionaire back in 2014?

The answer looks like yes.

Nine years ago, Tesla did not have the reputation is does now. Neither did Elon Musk. But through a special legislative session in a unanimous vote followed a signature by then Governor Brian Sandoval Tesla received a 20-year abatement on sales tax. Musk also received a ten-year abatement on modified business tax, electricity rate discounts, and transferable tax credits.

Tesla promised to spend approximately $45 million dollars on roadways at the Tahoe Reno Industrial Complex. Some of these deals were one-time provisions.

But those 2014 tax abatements were then written into Nevada Statute. It meant any qualified projects which make 3.5 Billion dollars in investments over a 10-year period could get the same entitlements.

To date, no other company has qualified for such abatements.

When asked if the giga-factory expansion would be dependent upon them, the Governor gave this answer:

“Well there is nuances associated,” said Lombardo. “It won’t be the exact same plan but, you know if you have naysayers, that reference that tax plan the proof is in the pudding. Right as you go past its fruition to years moving forward two-fold, three-fold they have returned on investment with that tax plan. So, hopefully, we can provide that diversification to all companies coming into the state of Nevada. So, it is successful for the future.”

Perhaps the nuance the governor is referring to...back in 2014 the special session was open for public scrutiny.

But just as the meeting between Lombardo and the Tesla team was closed to the public, a non-disclosure agreement between the state of Nevada and Elon Musk is currently in effect. No one will say what is being offered to Musk. But three days before the Governor’s Office of Economic Development meets on March 3rd, the agreements will be disclosed.

The agenda on that March 3, 2023 meeting includes only four items, all calling for investment abatements in Storey County at $3.5 billion apiece.

Last week we asked Mike Kazmierski, president of Economic Development Authority of Western Nevada, if he knew anything about the proposed deal with Elon Musk.

“The tax breaks for the first phase will phase out next year in 2024,” said Kazmierski. “And when that happens all the revenue from that manufacturing equipment tax will go right into our economy. We are one of only 8 states in the nation that taxes manufacturing equipment and that was the bulk of the abatements afforded to Tesla nine years ago.”

Kazmeirski says with the sunset of the manufacturing equipment tax more than $125 million will be added to the state economy starting in 2024. Reportedly property and payroll taxes forgiveness will expire in 2024 as well.

But Kazmeirski says the original 2014 deal will be put back in place for the new Tesla semi-truck factory.

Will any of this need approval or oversight from Nevada’s Legislature? Perhaps not since some of these tax breaks are written into statute from 2014.

While many see a deal like this as a boost to the economy, others would beg to differ. They point to increased traffic and further demand on housing in our area. There’s currently a housing shortage, and rents have increased substantially since Tesla’s arrival. Washoe County residents approved a measure in 2016 to increase the sales tax they pay--to fund new schools and rehabilitate others. It was a response in part to the number of people arriving in our area to work at Tesla. That increase means more than $30 million a year for school construction coming out of the pockets of Washoe County Residents.

While Tesla points to money they’ve contributed to local economies through their employees. Observers wonder if it is enough.

The new deal is undisclosed, and even it were to become public more than three days before a decision is made, they have no say in its outcome.