Picking Winners Or Boosting The Economy, The Catalyst Fund Question
A $10 million fund set up to entice businesses to Nevada or help those already here expand has been effective in creating jobs, according to supporters.
Created five years ago, the Catalyst Fund provides grants to companies looking to relocate or expand in Nevada.
And it has been successful, with more than a dozen companies receiving $10 million in grants.
But, the Catalyst Fund has been criticized and challenged in court by the Nevada Policy Research Institute and Michael Little, a North Las Vegas business owner.
The conservative think-tank believes the fund violates the gift clause of the state constitution, which says the state cannot donate or loan money to most private companies.
"When you're talking about government giving money to a private company, government doesn't just create this money," said Michael Schaus, the communications director for NPRI, "Government has to get this money from somebody else first. So in this case they took the money from small businesses that are already here in Nevada that were already trying to create jobs."
Schaus believes lowering taxes and removing regulations are better ways to spur businesses in Nevada.
He said the government should not be in the business of picking winners and losers.
"This is not what the government should be doing," he said, "Government should not be picking winners and losers... What government's role really is supposed to be when it comes to the business world is making sure that there is a clear set of rules and that we're following these rules."
However, those who support the fund point out that other states, municipalities and even countries are providing these kinds of incentives. If Nevada doesn't provide them, we will be at a disadvantage.
Schaus agrees the state would be at a disadvantage, but again points back to changes in taxes and regulations as the solution.
"The easier way to fix this, of course, is to say, 'All right, we're going to attract businesses here by lowering our regulatory burdens, by lowering our taxes' and the benefit of that is that it's going to also help the business that are already here in the state," he said.
He said the government needs to make it as easy as possible to start a business in the state so small businesses and startups can get a foot hold.
NPRI also argues the constitutional prohibition has been illegally circumvented by sending money to support a business through local governments.
"This is what we see so often in the government where they have a rule and so they'll create some sort of law to get around this rule," Schaus said.
They also say that because the money for the Catalyst Fund is coming from the state, small businesses are essentially funding their competitors.
Schaus does not believe the Catalyst Fund can be compared with the state's Education Savings Accounts, which allow parents to use up to $5,000 in per-pupil spending on private or home schooling.
A Carson City district court judge ruled Monday to put the accounts on hold while the lawsuits surrounding them are worked out. Opponents, who filed the lawsuits, say the accounts are the equivalent of government money going to private or religious institutions.
NPRI supports the savings accounts.
However, Schaus said money from an Education Savings Account for a private school is not the same as money from the Catalyst Fund for a private business.
"It doesn't do the same thing because it's not the state deciding what schools get money and what schools do not get money," he explained, "They are putting the education dollars that they are spending on educational purposes in your control as an individual parent."
Michael Schaus, communications director, Nevada Policy Research Institute