Gullible Nevada lawmakers in a special session in 2015 on blind faith alone agreed to dole out $215 million in tax abatements and credits to entice Faraday Future to build an electric car factory at the Apex industrial complex in North Las Vegas, though at the time it did not even have a prototype vehicle.
The deal, struck by the Governor?s Office of Economic Development, also promised to spend $120 million on infrastructure improvements at the site ? water, rail and widening of Interstate 15.
Faraday officials claimed they would build a $1 billion manufacturing facility, create 4,500 jobs and start producing cars as early as 2016.
Now the company is seeking $1 billion in outside investments, while cutting more than 300 jobs in the U.S. and closing its San Diego operations. Work on the Apex site also has stopped and there have been reports the would-be electric car manufacturer is stiffing some of its contractors.
The Chinese head of Faraday Future, Jia Yueting, is reportedly experiencing a cash crunch and, after investing more than $300 million of his own money in Faraday, will not be putting up any more capital, according to a news report from Bloomberg Technology.
Jia wrote in a memo obtained by Bloomberg News late this past year, ?No company has had such an experience, a simultaneous time in ice and fire. We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited.?
After visiting China in 2016 state Treasurer Dan Schwartz, long a critic of the Faraday largesse by the state, told the press, ?We?re increasingly more concerned than we were before that this is just a big Ponzi scheme.?
When word of Faraday?s fading fortunes surfaced, the head of the GOED, Steve Hill, was quoted as saying, ?Trying to predict whether a company is going to succeed or flourish, or even say what they?re going to do is ? you?re going to be wrong at times, maybe as often as you?re right.?
Sounds bit like playing roulette with tax money.
Reportedly the state hasn?t doled out any money to the listing electric car company yet, because the firm hasn?t reached the necessary threshold of spending to warrant turning on the taxpayer spigot.
This turn of events supports our oft-stated contention that spending taxpayer money to invite companies to come to Nevada to compete with those taxpayers is a bad idea and unconstitutional to boot.
The Gift Clause in Nevada?s Constitution states, ?The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.?
Self-styled economic development advocates have tried three times to amend the Constitution and remove the Gift Clause. The voters rejected those attempts all three times ? in 1992, 1996 and again in 2000 by wide majorities.
The state Supreme Court has said that when the state provides something to a private entity without getting adequate compensation for the value, that is a gift and thus a violation of the Constitution.
But the governor and our lawmakers continue to defy the Constitution with impunity.
Disband the GOED and stop calling special sessions to give away taxpayer dollars. ? TM