Nevada lawmakers meet to weigh Tesla tax deal

RENO -- A special session of the Legislature convenes Wednesday to consider a deal between Tesla Motors for its lithium battery "Gigfactory" near Reno, but it's not a slam dunk.

While the project, which comes with the promise of 6,500 permanent jobs, would benefit northern Nevada, some southern Democrats are wondering what's in its for their constituents. A Northern Democrat and union backer wants to make sure that a prevailing wage scale is used for construction workers hired on to build the facility. No state lawmaker has come out against the proposal but there have been some mummers of discontent.

The deal risks hurting insurance companies and film productions in Nevada. Insurance companies with home offices in Nevada have enjoyed tax credits that are worth $27 million a year. Under the proposed Tesla deal, the insurance industry tax break would end and the new revenue would be diverted to the Tesla deal. That's a $27 million tax hike for insurance companies with home offices in Nevada.

Democrats in 2013 pushed and succeeded in passing a four-year $80 million film-tax incentive program. It now will be slashed by $70 million because of the Tesla deal. Also, the Tesla package would include a bill that would allow Tesla and other electric car manufacturers the right to sell directly to the consumer and bypass car dealerships. This was a major issue in Texas not landing the Tesla factory, according to news reports.

Gov. Brian Sandoval's staff is expected to hammer home the point that this Tesla deal is going to be a big boost to all of Nevada. The deal will spur job growth in a still-struggling economy and jump-start a Northern Nevada construction industry that collapsed when the recession hit. Sandoval's staff will ask lawmakers to consider the ripple effect of any and all of the money spent in a $5 billion project.