Is The Tesla Gigafactory A “Race To The Bottom” For Competing States? – Video
Tesla is currently soliciting incentives from California, Nevada, Texas, New Mexico and Arizona to call their new battery plant home.
Reportedly, Tesla is looking for at least a 10% contribution towards the cost of the plant from the ‘winning’ state; as the facility’s total cost could reach as high as $5 billion dollars – that’s potentially a $500 million dollar perk. On top of that, other tax and financial incentives are also anticipated.
In response, a coalition of watchdog groups have banded together over the high profile business auction to make a stand against US states competing against each other, saying they have been “pitted into a race to the bottom” in a lose-lose scenario for both government and regular citizens.
CBS SF Bay Area filed a video report (above) on the petition that was sent to all 5 state representatives. Also, the complete letter (via Clawback.org) that urges “complete transparency” and responsible negotiations follows.
So far the response to the letter from all the states has been … complete silence.
An Open Letter to Arizona, California, Nevada, New Mexico, and Texas Officials About Tesla Motors
There is no question that state officials should place a high priority on boosting employment and fostering economy opportunity. But recently our states have been pitted into a race to the bottom from which no real winner may emerge. Tesla Motors’ proposed “Gigafactory” – undoubtedly a valuable source of economic growth for its eventual home state – has been offered to you in an unusual public auction, with the opening bid set at $500 million in subsidies. Since Tesla has chosen to make the process public, we write as unified voices from Arizona, California, Nevada, New Mexico, and Texas to argue that our states have more to gain from cooperation than from competition.
We call upon you to communicate and cooperate across state lines to strike a fiscally responsible deal that is fair to residents and businesses alike. It is time to break the harmful pattern of one state “winning” a high-profile competition, with other states left believing they need to offer even larger tax breaks to win future deals.
Overspending on Tesla – or any other company – could be a net-loss game in which fewer public resources are then available for investments in areas that benefit all employers, such as education and training, efficient infrastructure, and public safety. All state and local taxes combined equal less than 2 percent of a typical company’s cost structure, but lost tax revenue comes 100 percent out of public budgets.
What’s needed are smarter deals, recognizing that all of our states could potentially spend $500 million on other vital public services. Any agreement struck must be fully transparent – no law requires you to negotiate with Tesla or any company behind closed doors – and, furthermore, should include robust provisions for disclosing actual costs and benefits over time. Our states’ residents should feel confident that there are strict performance requirements and money-back guarantees to ensure Tesla delivers what it promises.
Tesla might even be receptive to a multi-state dialogue. The iconoclastic company, internationally known for innovation, could help chart a new path in how economic development is done. The automotive industry – with its far-flung supply chains and 50-state market – is a poster child for the idea that states are interdependent and that the main goal is the long-term growth of American jobs, not any single state’s ribbon-cutting.
We call upon our elected officials to seize this rare opportunity: talk to each other, let the public into the process, and when the time comes, strike a smarter deal that will preserve the tax base for the benefit of all.
Diane E. Brown, Arizona PIRG
Chris Hoene, California Budget Project
Bob Fulkerson, Progressive Leadership Alliance of Nevada
Javier Benavidez, Southwest Organizing Project (New Mexico)
Craig McDonald, Texans for Public Justice
Greg LeRoy, Good Jobs First
Hat tip to Eric H!