News - February 28, 2020 - by Ray Hagar
The days of offering tax breaks and other perks to attract large companies such as Tesla and Apple to move to Nevada are over, said Michael Brown, the executive director of the Governor’s Office of Economic Development.
Those perks were considered essential to attract business to Nevada during the recession. But now that Nevada enjoys a robust economy, the shift has turned to attracting high-paying jobs, building affordable housing, plus improving transportation infrastructure and access to healthcare, Brown said on Nevada Newsmakers.
"Policy makers are looking at this and they are going, 'this has turned upside down,'" Brown told host Sam Shad. "We should be talking about work force. We should be talking about community college training programs, apprenticeships. We should not be talking about (tax) incentives at this point. Not with a full economy and full employment."
Brown was not critical of granting tax incentives when Nevada's economy was reeling. It was the smart play during hard times.
"I don't know if policy makers in 2010 had any other options, though, to go forward," he said.
"Telsa was transformational for Reno," he added. "(Yet) it has produced social costs and housing and transportation issues that we're now trying to get over the hump on."
Nevada is looking for quality over quantity when it comes to attracting new business, Brown said.
"We should be looking at higher-paying jobs," Brown said. "We saw statistics the other day that 60 percent of Nevada workers still make less than $20 an hour and that is really not acceptable. Now is the time to be pivoting and trying to figure out that if we are going to bring new employers here, how do we bring new employers with higher wages and salaries?"
Nevada's official change of heart on economic development is part of a national trend that grew after the wasteful bidding war among U.S. cities and states to land Amazon's Second Headquarters (HQ2) in 2018.
For example, Maryland’s offer, one of the few made public, amounted to $8.5 billion in tax credits and incentives, according to the Washington Post. Amazon, however, was offering about 50,000 jobs and $5 billion in investments.
Opponents of the Amazon bartering insisted that one of the world's most valuable companies -- owned by one of the world's richest men -- does not need and should not seek tax dollars that could be spent on schools, housing and other public needs.
"Amazon's HQ2 has caused people to rethink this," Brown said. "The real focus has to be on workforce, training programs, strengthening our apprentice programs, strengthening our community colleges. We have hundreds of occupations of need here in this state and in over half of them, the (education) requirement is more than high school and less than a four-year degree. That's the space that economic development needs to focus on. Somehow, across the country, it had all been a debate about incentives and now we need a much more robust debate."
Medical issues must be considered when dealing with the state's growth, Brown said. The lack of doctors and other medical professionals has plagued the state for at least 20 years. A special session of the Legislature was called by Gov. Kenny Guinn to address the problem in 2002.
"One area that concerns me the most is medical care," Brown said. "We are seeing major gaps in medical care. Californians are moving here but they are not bringing their doctors. They are not bringing their dentists or their ophthalmologists. So one of the things that you will see out of the new state economic development plan is the priority in the area of health care, which ties back into issues of occupational licensing. It is kind of a series of dominoes that you have to put in motion to solve problems."
Brown is including other departments of state government to help Nevada's economic development plans.
"One of the things that I have implemented since I got there is that GOED was a bit silo-ed in state government," he said. "It tended to function by itself, just working with the governor.
"I have really embraced the rest of the cabinet, particularly my old department, Business and Industry, which controls the private activity bonds used in housing. The governor has really prioritized using our private-activity bonds for affordable housing for projects here in Reno and down in Las Vegas. It is a statewide problem. It is also a problem in the rurals."