The Long Term Solution to Nevada’s Budget Crisis

The perennial budget woes that Nevada faces year after year boil down to insufficient
revenues to pay for State funded services. Given that Nevada is principally inhabited by
tax evaders who are fundamentally opposed to paying for State provided services,
raising taxes is nearly impossible. Consequently, a visionary solution must be found to
pay for a State government that chronically suffers from woefully inadequate tax
revenues.
For decades now our political leaders have been telling Nevadans (and the rest of the
US) that the renewable energy potential of Nevada is equivalent to Middle Eastern oil
reserves. If we are sitting on such a potential bonanza, why is our State government so
broke? Why are our schools so underfunded? Why are our social services so destitute?
Why are so many Nevadans out of work?
The kingdoms, sheikdoms, emirates, theocracies, and dictatorships of the Middle East
pay for their governmental operations through royalties from their oil fields. Alaska does
the exact same thing as do other oil and gas producing US States. What is Nevada
missing out on here, and why?
To solve its interminable budget shortfalls, the State of Nevada needs to go into the
merchant power business as the owner of renewable energy generating facilities
alongside commercial renewable power generators who have already blazed the trail.
The plan should be to locally generate power for export to other States whose needs
will increase geometrically over time as hybrid and all-electric vehicles become
prevalent. These next-generation vehicles will suck enormous quantities of power out of
their local electric grids causing brown-outs and blackouts. State of Nevada-owned
renewable energy facilities will bring significant sums of out-of-State revenues into
Nevada. They will also bring short-term construction jobs as well as long-term
operations, maintenance, and administrative jobs to Nevada.
To accomplish this will require:
1) Vision to see the 21
st
Century and beyond
2) Leadership by both the Governor and Legislature
3) Allocating State lands and leasing tracts of Federal lands upon which to construct
solar, wind, and geothermal facilities
4) Raising private capital from investors through public bond sales to pay for the
construction of solar, wind, and geothermal facilities
5) Contracting with engineering and construction firms to design and build solar,
wind, and geothermal facilities
6) Contracting with facility management firms to operate, maintain, and manage
solar, wind, and geothermal facilities
7) Negotiating long and short term sales contracts with consumers of electric power
8) Financial management to finance construction, pay contractors and vendors,
repay bondholders, and pay dividends back to Nevada
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The State Office of Energy will require a new division to manage the design,
construction, and maintenance of these State owned renewable energy facilities similar
to what the Public Works Board and Department of Transportation already do with their
own construction projects. The State Office of Energy will also have to negotiate both
long and short term contracts to meet the power demands of its customers. To insure
that Nevada gets the best possible price for its power, the State Office of Energy should
hire experienced energy traders with in-depth knowledge of the inner workings of
energy markets. There are still former Enron traders on the loose out there who know
how to sell power to California at the highest price.
The Treasurer’s office will have to manage bond sales to investors and collections from
power customers. The Controllers office will have to manage payments to contractors,
vendors, facility managers, and bondholders. Both offices will have to add accounting
staff to manage this venture.
The long-term financial benefits from an energy-generating venture will be in the trillions
of dollars. To insure that these revenues are wisely used for the long-term benefit of all
Nevadans, 100% of the revenues after construction costs, bondholder payments,
operations, maintenance, and administrative costs must be deposited into a “Sovereign
Wealth Fund” similar to what the oil-producing Middle Eastern countries have set up for
themselves. This Sovereign Wealth Fund should be a separate entity controlled by an
independent Board of Directors with staggered 4 year terms who are jointly appointed
by the Governor and Legislature. Once appointed, the Board members must be
completely independent of State government to prevent the politics of the moment from
influencing their decisions which must be long-term in nature.
The principal assets of the Sovereign Wealth Fund should be invested in dividend
paying stocks, bonds, and other revenue producing instruments by professional fund
managers. The fund should be inflation-proofed by reinvesting a portion of the dividends
equal to the rate of inflation each year back into the fund to keep it steadily growing over
time. The remainder of the dividends that the Sovereign Wealth Fund produces should
be paid into the general fund for normal allocations by Legislatures and Governors.
This structure will keep the Legislature’s and Governor’s hands out of the Sovereign
Wealth Fund’s principal, and limit their access to the dividends only. A constitutional
amendment will probably be required to set up the Sovereign Wealth Fund so that it is
isolated from future Legislatures and Governors to protect its principal.
As the bonds used to construct the facilities are paid off over time, revenue streams into
the Sovereign Wealth Fund will increase dramatically. All of which will provide Nevada
with a long-term endowment to fund a portion of State government with. Eventually, the
Fund will be able to self-finance new construction of its own facilities.
The initial goal of the Fund should be to create an endowment for Nevada with sufficient
revenues to equal the State’s yearly contribution to education. If the Sovereign Wealth
Fund can grow over time to the point where it can pay for the State’s yearly education
expenditures, the remainder of State expenses will be relatively easy to fund from other
revenue sources.
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21
st
century businesses need good quality educational systems that produce university
level graduates in order to survive and prosper in this century. A Sovereign Wealth
Fund that can pay the State’s share of K-12 and university funding will make Nevada a
very attractive place for out-of State industry to relocate to. New businesses will
diversify our economy beyond gaming, tourism, and mining, thereby providing new
types and numbers of jobs for Nevada’s workforce.
To create this pragmatic long-term solution to Nevada’s interminable budget woes will
require an extraordinary level of political will and vision over the objections of naysayers
and doomsayers who abound in Nevada. We need leadership who understands that
Jesus saves for the moment, but Moses invests for the long-term.
Nevada needs to find a long-term investing Moses who can lead us out of the
wilderness into the promised land of financial independence and economic diversity. In
short, Nevada needs a miracle to survive and prosper.
Fred Kessler
Carson City


Dear Mr. Kessler,

Thank you for your well thought out plan of action to bring revenue to the state of Nevada.  I view the function of government as an overhead expense for the private economy.  As a former businessman I believe in minimizing overhead costs.  Government run businesses are rarely successful or profitable. Government run businesses generally do more to distort the marketplace than to contribute to it.  For these and other reasons, I am against government attempting to run businesses. 

You have the basis for a viable and successful business and I urge you to pursue it as a private businessman.  The taxpayers may choose to support you individually through the mechanism of the financial markets.  But I don't support obligating the taxpayers to support private business ventures.

Your design of government run businesses has been tried in many other countries, and it is a departure from the American system of private free enterprise. You will note by the absence of world superpowers embracing the economic model you propose that it has not worked to date. 

If you decide to pursue your proposal as a private enterprise, I would be available to assist with modifying or removing regulatory roadblocks to your success. 

Sincerely,
Alex Miller
Alex Miller for U.S. Senate
NevadaCan.com

Unfortunately, you have missed the central point of my plan, which is to generate a steady income for the State of Nevada without having to tax the citizenry for it. I'm not interested in personal or private profit, but rather public profit which can be plowed back into education to pull Nevada up from third world status which it currently languishes in. Our educational system is abysmal.
 
This form of State capitalism has been successfully used by monarchs for the past 5,000 years, and more recently by modern Nations around the world. State owned non-profit corporations may be the way to structure this venture for the benefit of all Nevadans, not just a few greedy ones.
 
Utility companies of varying sizes have been owned by local, State, and Federal Governments since Thomas Edison invented the light bulb. There is nothing new here on that score. Guess who owns Hoover Dam?
 
The City of Los Angeles avoided being raped by Enron because they generate their own power. The rest of California was not so lucky, and suffered at the hands of Enron criminals.
 
The real question here is, are you committed to improving the quality of life and lowering the tax burden on Nevadans, or are you more committed to corporate profits? What is your real goal in running for elected office?
 
Please let me know.

Dear Mr. Kessler,

I am unconvinced that a state agency could implement and run your proposal with greater efficiency or effectiveness than you yourself could. Even if we could find the person best able to determine which part of the product to begin first, would they be willing to work for the wages that the state pays? 

The difference between your running your proposal and the state running it could be the difference between success and failure.  Without the incentive of making a profit to survive, this project could wind up as another government boondoggle. Do you want to saddle Nevada taxpayers with a failed project when they really need cheaper power, more jobs and someone to share the tax burden?

You, running your proposal effectively and profitably would benefit the state with increased employment and economic activity some of which would then be taxed and thereby more widely distribute the tax burden on Nevadans.  Implementing this philosophy across all industries raises enough tax revenue to fund the necessary and proper activities of government without risk of burdening the taxpayer with unprofitable, poorly run, businesses.  Cherry picking the most profitable businesses, in addition to taxing the rest, would cripple the economy and lower total tax revenues.  I appreciate your dedication to civic progress and I hope you will pursue this project for your benefit as well as Nevada's.

As to your question of what is my real goal in running for office, it is to restore representative government to Nevada and stop the looting of our treasury.
.

Sincerely,
Alex Miller
Alex Miller for U.S. Senate
NevadaCan.com
 Alex Miller U.S. Senate


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