State seeks to invest in business

Tuesday, March 14, 2000 | 10:47 a.m.

CARSON CITY -- Legislators are making a second attempt to change the state Constitution to allow taxpayer money to be invested in private business to spur economic development.

Wording in a ballot question was given final approval Monday by the Legislative Commission, which is hoping for a different outcome than in 1996, when 65 percent of the voters turned it down.

After the defeat in the 1996 election, the 1997 Legislature revived the proposal, which passed two sessions and must now be ratified by the voters.

The state will put the question on the November ballot. Approval by the voters means the Nevada Constitution could be changed to allow the state to invest in local businesses.

Roberta Lange, representing Nevadans for Economic Opportunity, a group that is promoting passage of the ballot question, told the commission the voters did not understand the ballot question in 1996.

Voters, she said, were concerned it would raise property taxes and wanted to make sure there would be accountability in spending the money. In new "focus group" discussions, people changed their mind to favor the amendment after it was explained to them, Lange said.

The Constitution now prohibits the state from investing its money in any company, association or corporation except those formed for educational or charitable purposes. The proposal would permit investments in private firms to assist in economic development and the creation of new jobs.

Lange said Nevada is one of six states that doesn't provide some type of venture capital for companies. The proposed constitutional amendment would require the state to realize a "reasonable rate of return on the investment," and the Legislature would have to approve each project by a two-thirds vote.

Under present law, companies can take advantage of low-cost bonds to build new plants, they can get tax exemptions or deferments and there is state money available to help train workers.

Opponents of the proposal call it corporate welfare and say traditionally the state has left any risk of loss associated with investments involving private business to private investors.

Lange said the voters in 1996 did not understand the concept of economic diversity.

"It was a complex issue," she said. "People want high-quality jobs, something that pays $35,000 or more."

But she said a "red flag" went up when the Legislature wanted to change the Constitution.

The Legislative Commission, which handles business of the Legislature between sessions, approves the language on the ballot explaining the proposed constitutional amendment and also the arguments for and against the measure.

The argument for passage is that new capital investment is needed to diversify Nevada's economy, diversify the state's economic base and improve the standard of living for its residents.