Nevada Governor Steve Sisolak is retreating from his plan to introduce legislation that would have allowed tech companies to form local governments within the state. Per The Nevada Independent, the governor now instead plans to create a bipartisan committee made up of state Senate and Assembly members to study the idea. At the end of 2021, the group will present recommendations to Sisolak, with one possible outcome being that they suggest he abandon the proposal.

"Innovation Zones is a bold proposal for our State that deserves additional attention and discussion — and not under the pressure of less than 40 remaining days in the current legislative session," Governor Sisolak said in a statement. "I know that legislators, stakeholders and Nevadans still have questions, and I want those questions to be discussed and answered. I want people to be enthusiastic about this opportunity, not skeptical about a fast-tracked bill."

Governor Sisolak first floated the idea during one of his State of the State addresses earlier in the year. He positioned Innovation Zones as a way for Nevada to attract tech businesses without the need for measures like corporate tax breaks. Draft legislation obtained by the Las Vegas Review-Journal laid out a system where companies in verticals like cryptocurrency, artificial intelligence and renewables would have had the option to form local governments with the same powers and responsibilities as counties. That means those companies would have had to do things like collect taxes and operate school systems.

While Governor Sisolak never introduced a formal bill, the proposal was contentious right from the beginning. In addition to concerns from tribal communities and environmental groups, there were questions about the organizations supporting the idea, particularly around a company called Blockchains LLC. According to The Nevada Independent, the firm had both run TV ads in favor of the proposal and lobbied the government. It had also contributed $10,000 to Sisolak's 2018 election campaign and $50,000 to a PAC affiliated with the governor in 2019.