In the past two fiscal years, the Governor’s Office of Economic Development has granted tax abatements totaling $112.74 million to a long list of companies.
But Director Steve Hill told the Economic Forum on Friday that those temporary tax breaks are generating an estimated $2.8 billion in capital investment by companies either expanding in Nevada or moving here and a total economic impact of potentially more than $7.8 billion.
He said that even when the two huge corporate moves — Apple and Boulder Solar Power — are removed from the list, the tax breaks should generate far more than the cost of those reductions to sales, property and business taxes.
Hill also assured forum members that his office is making sure those companies come through with the jobs and other investments they promised to get the tax incentives. Every contract sets a number of jobs and a range of pay, plus promises to invest a certain amount within a given time frame, he said. And every contract, Hill said, includes “claw-back” provisions.
“If substantial compliance is not achieved, that claw-back kicks in,” he said, meaning that violators then have to give up the tax breaks and refund lost taxes to the state.
Those tax breaks, he said, don’t last forever. The sales tax cuts are only good for two years and the business tax for four years, although the personal property tax abatement is good up to 10 years.
Another tax break expected to roll out in the near future, he said, is the film tax credit, which gives breaks in the form of transferable tax credits to companies that bring motion picture and TV productions to Nevada as well as video game and other entertainment software developers. That law permits issuance of up to $20 million in credits each of the next four years.
GOED is running several other programs that also are designed to bring business and jobs to Nevada, Hill said. The Catalyst Fund contains $11.5 million for expansion and relocation of businesses that create high-quality jobs in the state. That and the $10 million Knowledge Fund both were funded by the governor and Legislature.
There also are the three federally funded programs: Train Employees Now (TEN), Silver State Works and the Battle Born Venture Fund.
Hill said his office will track the companies that get the state’s help over time to make sure they do what they promised.
“We will be looking at the difference between what is projected and what actually takes place,” he said.
Legislative Economist Russell Guindon said that information will be important to the forum in the future when it is attempting to understand the state of Nevada’s economy as its members forecast state revenues for use in building the state budget.