State-issued bonds that promote more business activity in Nevada are about to quadruple in dollar amount, and a citizens' advocacy group says it's time to see whether such ''corporate welfare'' is justified.
Questions about the benefit of the state Industrial Development Revenue Bond program have been raised by the Progressive Leadership Alliance of Nevada, a citizens advocacy group.
''We don't want to have a blanket condemnation of corporate welfare,'' says PLAN's Bob Fulkerson. ''We just want to ensure the public is getting a favorable return.''
Since 1982, the program has generated nearly $200 million in state-issued bonds.
After a detailed application process, the state gives its support to private businesses to win low-interest loans to pay for expansion they might not otherwise be able to afford.
Ideally, the company expands and creates jobs in the process, broadening the state's economy.
The company pays off the low-interest loans out of its revenue, and the state isn't obligated to pony up any money if an enterprise fails.
The lenders receive a tax break on federal income taxes.
Chas Horsey, the agency official who for years has overseen industrial development bond deals, said it's not fair to describe the program as ''corporate welfare.''
''There are a lot of risks involved. This involves a major commitment on the part of the private sector,'' he says.
''The days are long gone when the private sector and the public sector don't cooperate,'' he adds. ''To entice a company to Nevada, we need to show that our government is proactive, creating a positive business environment - and this does that.''
Now, in one deal, the bond amount could more than quadruple to $850 million.
The state Board of Finance, chaired by Gov. Kenny Guinn, is considering whether to issue $650 million in the development bonds for a major Las Vegas monorail project linking various Strip resorts and the Convention Center.
The tax-free bond issue would be for a project that's different than the earlier business expansion deals, and it would be the largest ever granted in Nevada.
But the development bonds for the monorail project are issued under the same state law that govern business expansion projects. The bonds don't rely on any state funds or count against the state's limit on bonded indebtedness.
Still, Fulkerson says a legislative review of the development bond program is especially important now because voters will be asked in November to give still more breaks to business.
Question 1 on the ballot seeks to change the Nevada Constitution to allow state funds to be invested in public-private partnerships and corporations.
''Until we can figure out how to responsibly manage the corporate welfare we already have, it's not a good idea to give out more,'' he says.
Assemblywoman Barbara Buckley, D-Las Vegas, part of the Assembly leadership team, was asked by Fulkerson to look into the bonds. She says a review might be a good idea.
''It's always a good idea to routinely examine programs to assess whether they're a success, and to get a cost-benefit analysis,'' Buckley said.
''If the analysis shows the economy has been diversified and there are more jobs, we might conclude it's a success. But if we learn it isn't, then maybe we should explore it further,'' Buckley adds.
A table provided by the state Department of Business and Industry which handles the development bond program, shows that the nearly $200 million in bonds issued since 1982 helped to create about 4,700 jobs.
Sydney Wickliffe, the agency director, says the monorail project might result in only a few hundred more jobs. But she adds that it's too simplistic to simply count up the number of new workers.
Wickliffe adds that Gov. Guinn has emphasized economic development efforts that draw in businesses that offer good-paying jobs instead of something that's simply labor-intensive.
