While pot and gaming pay big tax numbers to the state of Nevada, Elon Musk is draining Nevada’s state coffers thanks to Governor Sandoval, State Senator Michael Roberson and former Senate majority leader Harry Reid.
WHERE NEVADA’S BUDGET SURPLUS GO?
The local press is ignoring the Tesla debacle but Russ Mitchell, investigating for the LA Times, writes, “Budget officials had expected a $61.1 million surplus for the fiscal year. But according to Nevada’s Legislative Counsel Bureau, which advises lawmakers on budget matters, Tesla sold credits faster than the state expected, reducing the surplus to $18.4 million.”
Hey, it’s no big deal, says Sandoval right hand Mike Willden. “The state’s finances are healthy, and revenue from other sources shows signs of adding to the budget surplus,” Willden told the Times.
Well yes, the cannabis industry, the Reno Gazette Journal reported, “With three months still in the fiscal year, Nevada has already brought in about 97 percent of the combined marijuana tax revenue that was projected for the entire fiscal year. The state’s projection for total amount of marijuana tax revenue this year was $50.32 million.”
There were no tax incentives for the marijuana industry, just continued tax bludgeoning: to fund schools and police? No. Pot providers pad Musk’s bottom line. Despite the taxpayers’ cash, the company is burning through a billion dollars per quarter.
THE ART OF THE STEAL
Back in 2014, Tesla was trolling for suckers, they found Sandoval, Roberson and Reid, and the rent-seeking romance began. Amazingly, Tesla didn’t make a demand. The company gave a presentation which was pure Muskian fantasy and let the politicians fall all over themselves to throw money at it.
“There was no starting ask. There was a presentation of the opportunity, of the plan, what we were going to do, and an invitation to participate in a dialogue of what economic development programs in the state were available,” Diarmuid O’Connell, Tesla’s vice president of business development, told the Washington Post.
Mr. O’Connell, like dozens of other Tesla senior executives has left the company.
While Jerry Brown offered Musk $500 million from California’s coffers, Sandoval handed over $1.3 billion of Nevada taxpayer funds. The Washington Post reported at the time,
“[H]e has been there every step of the way,” Sandoval said of [Harry]Reid at the press conference. On the Senate floor, Reid said Sandoval’s “patience and diligence made this possible.”
The dealmaking duo patted each other on the back for creating 6,500 jobs at $200,000 per job. Believe it or not, this isn’t too bad for, shall we say, government give-away work. In a 2103 report by “Good Jobs First” authored by Philip Mattera, Kasia Tarczynska and Greg LeRoy entitled “Megadeals” the authors explain,
Among those deals for which we have employment projections, the cost per job varies radically from about $4,000 to more than $1 million in 18 instances. The average for the 170 megadeals for which we were able to make the calculation is $456,000 (averaging the per-job costs of the deals, not all jobs weighted).
CASINOS PAY TAXES FOR TESLA TO SURVIVE
Since tax incentives require taxable income to be of any use, and the car company has little hope of ever generating such a thing, Sandoval and Reid offered tax credits Tesla could sell right away to generate cash flow to keep Musk’s dream alive.
The LA Times, reports, “So far, Tesla has sold $131 million in credits to casinos and has booked a total of $163 million in anticipation of more sales soon.” Casinos have been the primary buyers of these tax credits at 85 to 95 cents on the dollar to apply towards monthly gaming revenue taxes.
Tesla has another $32 million worth of credits available, with $17 million ready next month. But, as the Times reports, after losing $2.2 billion last year “$17 million in casino cash could almost be considered a rounding error.
TAXPAYERS FUND GREEN RELIGON
Four years later, its apparent Reid and Sandoval and Roberson fell for Musk’s lies. “Let’s just say Tesla and Mr. Musk have a broad interpretation of the truth,” Jim Chanos, founder of Kynikos Associates, told CNBC’s Kelly Evans. “There have been all kinds of announcements that this company has made … that turned out not to be true.”
Chanos, who famously uncovered, and profited from, the Enron fraud, says Tesla is worthless.
Also believing Tesla stock is worth zero is a Yale-trained trial lawyer and money manager who goes by the name Montana Skeptic. Mr. Skeptic told Jim Grant that the Northern Nevada gigafactory is only a third the size it was supposed to be and that the cells Panasonic is producing, and Tesla is committed to buy, is old technology. The rest of the EV world has shifted to a pouch technology.
“Tesla is not a business enterprise,” says Skeptic, but “is the new religion of our day,” with Musk as minister of this anti fossil fuel church.
CHECKS ALL THE BOXES
Besides misleading shareholders, the company has no shortage of legal troubles with 2 percent of Tesla automobiles subject to lemon law litigation. For other carmakers, that percentage is only 0.1 or 0.2 percent.
Explaining why he is short Tesla stock, Chanos told Reuters, “Put it this way. If you wouldn’t be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.”
While Chanos (whose cousin George was Nevada Attorney General) is short Tesla for all the right reasons, Sandoval, Reid and Roberson have Nevada taxpayers propping up what historians will view one day as a gigantic corporate fraud at the expense of Taxpayers and government services.
Ayn Rand said “Government ‘help’ to business is just as disastrous as government persecution…the only way a government can be of service to national prosperity is by keeping its hands off.”