Wednesday, July 18, 2007 | 7:02 a.m.
If there were an overall lesson to be learned from the "green" building/tax break fiasco that turned good intentions into hellish consequences, it is this:
Beware the handiwork of legislators; but be even more wary of the unelected regulators who translate laws designed for general, abstract situations into regulations designed for the real world.
And now it is happening again.
You may recall that after the 2005 Legislature passed what was conceived of as a relatively minor tax incentive for would-be environmentally friendly builders, it became a license to rape the system for the state's most powerful interests after a transmogrification facilitated by the state Tax Commission. That metamorphosis turned a loss to the state budget of a few hundred thousand dollars into a nine- or 10-figure disaster for the general fund.
The 2007 Legislature tried to fix the problem, led by Assemblywomen Marilyn Kirkpatrick and Debbie Smith, who uncovered a pattern of heavy lobbying of regulators by corporate (mainly gaming) interests that subverted the intention of the original law. After Gov. Jim Gibbons vetoed a suspension of the tax break because he said he feared lawsuits, lawmakers passed a new bill designed to mitigate the loss of revenue while sustaining the green-building program. Uncertainty about who was in and who was out under the new law caused speculation about lawsuits.
But lobbying is so much simpler - and more effective - than suing. So now, with a work session held Tuesday and the tax panel set to consider a proposed regulation to implement the new law on Aug. 6, it is deja vu all over again. The regulation, clearly influenced (written?) by folks with Las Vegas Boulevard addresses, attempts to create such expansive definitions - we have seen this before - to ensure the tax breaks not only are widespread but also are massive. To wit:
The proposed regulation would create a broad definition of a "pre construction or construction contract" in the law to include:
"Any financing or funding agreement, instrument or commitment, whose proceeds may be used for the construction of the project; or any letter of intent or notice to proceed to or from a developer, construction manager, owner, an owner affiliate, or owner's representative, to a construction contractor, related to work on a project; or an executed construction contractor's proposal."
Read that again, folks. In case you missed it the first time, that is at the very least a stretching of the legislative intent and at the very worst a contravention of what the law was supposed to do.
And there's more to ensure that these environmentally conscious titans of industry get as much money back as they can for their contributions to a greener society. To get some of the tax break approved, developers need to have defined what the law calls "qualifying products and materials." The proposed regulation is comical in its inclusiveness:
"Such equipment shall be deemed substantial and not incidental, and shall include without limitation (i) cranes ; (ii) man lifts; (iii) hoists; (iv) heavy equipment; and (v) scaffolding, but shall not include without limitation (A) golf carts, mules or other personnel transport vehicles; (B) mobile or temporary offices; (C) computers, copiers and other office equipment and supplies used for administrative support for the project; (D) small tools with a cost basis less than $1,000; and (E) any labor associated with the operation or maintenance of such equipment."
At least they didn't include the mules and the hammers. I am sure that the developers and gamers who stand to profit are laughing all the way to the Tax Commission meeting on Aug. 6.
Indeed, this would all be quite humorous if it weren't so insidious and so emblematic of how the state works, when moneyed interests, having failed at what they usually succeed at doing during the session, go to Plan B: Change the regulations to make the law fit what they wanted it to say.
It is frightening how often this must happen and it is not discovered.
You can be sure Kirkpatrick and Smith will not sit idly by and will gin up as much opposition as they can .
It's hard to believe the tax regulators would follow through with this proposal after being portrayed as willing pawns of big business the last time around. But if there's one overall lesson to be learned from how politics works in Nevada, it is this: Never be surprised.
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