A conservative Nevada think tank filed a lawsuit Wednesday against the governor’s economic development office, claiming subsidies funneled to private businesses are unconstitutional.
Nevada Policy Research Institute argues that a Catalyst Fund created by the 2011 Legislature to entice businesses to come to Nevada amounts to an illegal use of taxpayer dollars.
The lawsuit was filed on behalf of Michael Little, who says $1.2 million in subsidies committed to SolarCity puts development of his own alternative-energy business at a disadvantage. Little is the son of Patricia Little a former Democratic assemblywoman from Clark County who served in the mid-1980s.
Little acknowledged he has not applied for Catalyst funding for his own business, Landfill Alternatives, a company he is developing to turn household waste into alternative energy.
“Nevada’s Constitution clearly states that state government has no business picking winners and losers in the economy by subsidizing the favored,” said Joseph Becker, lead attorney and director of NPRI’s Center for Justice and Constitutional Litigation.
Becker said subsidies from state government “directly harm both taxpayers and competing businesses.”
The Catalyst Fund was part of AB449, a sweeping overhaul of Nevada’s economic development system approved by the 2011 Legislature. The fund included $10 million to provide assistance and incentives for companies to locate or expand in Nevada.
The suit names the state, the Governor’s Office of Economic Development, and its executive director, Steve Hill, as defendants. State officials had no immediate comment on the lawsuit.
Taxpayer money from the Catalyst Fund is distributed to regional economic development authorities for payment to businesses that have been approved for subsidies.
The lawsuit argues that doesn’t resolve the constitutional hurdles.
“Having a so-called regional development authority or a local government give money it received from the state to private business doesn’t change the fact that state taxpayer dollars are going to private businesses in violation of Nevada’s Constitution,” Becker said.