By Sandra Chereb
CARSON CITY, Nevada, Sept 11 (Reuters) - Nevada lawmakers on Thursday moved forward a package of bills to provide $1.3 billion in tax breaks and other incentives to Tesla Motors , taking crucial steps toward clinching a deal for the electric car company to build a massive factory in the state.
The biggest chunk of the deal, approved by the state senate and set to go to the assembly later in the evening, won support in day two of a special session called by Republican Governor Brian Sandoval to implement an agreement for Tesla to locate its planned $5 billion lithium-ion battery factory in an industrial park 20 miles east of Reno along Interstate 80.
"This is arguably the biggest thing that has happened in Nevada since at least the Hoover Dam," the mammoth Depression-era project on the Colorado River that employed thousands and provided hydro-electric power to the state in the 1930s, said Assemblyman Ira Hansen, a Republican from Sparks.
Tesla, founded by entrepreneur Elon Musk, decided to locate its factory in Nevada after negotiating with several states, including Texas, Arizona, New Mexico and the company's home state of California.
To clinch the deal, Sandoval promised that tax credits and other incentives would be available for up to 20 years, an offer that must be approved by the legislature.
The factory is key to Nevada's efforts to revitalize its economy, which was hard-hit by the mortgage meltdown and the Great Recession, and has yet to fully recover.
"It diversifies us into cutting edge technology," Steve Hill, Sandoval's chief of economic development, testified in a senate hearing Thursday.
Among the bills approved Thursday in both houses was a provision phasing out and eliminating 1970s-era tax credits for insurance companies, which backers said would free up about $125 million over five years beginning in 2016 for transferable tax credits to Tesla.
The package passed in the senate also would gut a pilot program approved just last year giving tax credits to the film industry, freeing up about $70 million for Tesla.
Another provision would require at least half of all workers hired by Tesla be Nevada residents, though it allows for waivers.
The governor's office estimates the 5 million-square-foot factory will create an immediate 3,000 construction jobs, 6,500 factory jobs and 16,000 indirect jobs once completed.
(Editing by Sharon Bernstein and Ken Wills)