Northern Nevada’s economic leaders discuss path to COVID recovery

RENO — Back in late January, at the Economic Development Authority of Western Nevada’s annual State of the Economy, Mike Kazmierski touted the Reno-Sparks area’s jump in job creation, drop in unemployment rate and overall economic growth.

A celebratory scene, more than 1,000 smiling members of the area’s business community filled the room.

A lot has changed since.

Roughly two months later, with the COVID-19 pandemic slamming the brakes on Northern Nevada’s fast-growing economy, a working-from-home Kazmierski spoke as part of an April 3 virtual panel discussing the region’s path to economic recovery, underscoring the need for a better-educated workforce.

Pointedly, he said schools statewide should be teaching classes on things like coding and robotics, which he called “the next generation of skills.”

“That will make it easier to attract the next generation of jobs and grow the next generation of jobs through our entrepreneurial activity,” he said.

For this to happen, however, the state needs to properly fund education, he added.

“This crisis will probably accelerate our transition into the Fourth Industrial Revolution,” he explained. “Automation and AI is going to be accelerated, which requires a better-educated workforce at a time when our state is going to take huge budget hits in the next couple years.

“That will impact their ability to properly fund education, which is already improperly funded.”

EDUCATION FUNDING

According to Education Week’s 2019 Quality Counts report, Nevada ranked 48th out of 49 states in school financing, and second-to-last in public education overall. The state spends about $9,200 per student — for comparison, that’s a little more than half of Wyoming’s $18,090.

Last June, Gov. Steve Sisolak signed into law a new school funding formula — until then, Nevada had the nation’s oldest school funding formula.

Additionally, the state redirected funds generated by a tax on marijuana sales from a rainy day fund to an educational fund, generating an estimated $119.9 million in additional school funding over the next two years, according to previous reports.

“We’re giving 30% of our budget, in theory, to education. The reality is, we’re still at the bottom of the heap when it comes to national funding,” Kazmierski said April 3, adding that education lobbyists and parents need to make their voices heard loud and clear by elected officials. “We’re moving in the wrong direction, so at some point we need to get together as a state and say education is our top priority.

“I think it really is something that will benefit not just the here and now, but our economy in the long-term.”

Still, despite the efforts of the 2019 Legislature to update and increase education funding in Nevada, it remains to be seen how the COVID-19 crisis will impact funding in 2020 and beyond.

Not long after the April 3 forum took place, Sisolak issued an order directing state agencies and other recipients of state funding to prepare for potential budget cuts as a result of reduced tax collections caused by coronavirus-related business closures.

In his order, Sisolak said agencies should identify a 4 percent cut this fiscal year and a 6 percent cut in fiscal 2021 — and he added that there could be two additional 4 percent reductions in 2021 if the situation worsens.

Though it will take weeks to determine how deep (if at all) cuts need to be made, Sisolak said K-12 school funding could suffer a massive reduction, with the Distributive School Account losing $81.6 million in the first scenario and $104.8 million if the extended reductions are ordered.

RETRAINING THE WORKFORCE

Patricia Herzog, director of the rural economic and community development for GOED, said she also foresees the state’s shift toward robotics and AI being put on a “fast-track” following the COVID event.

In fact, Herzog said her office is discussing the idea of giving folks who are unemployed due to the shutdown of non-essential businesses and cutbacks by companies statewide an opportunity to retrain into skilled positions at manufacturing companies with hiring needs.

“Is there an opportunity for folks to learn some skills and utilize the resources we have when they didn’t have the time to learn new skills before and get them back to work?” Herzog asked during the April 3 panel. “These are conversations we’re having in our office right now.”

To that end, Jeff Brigger, director of business development at NV Energy, said getting people back to work “as safely and as quickly as possible” should be the first immediate priority for the region.

According to the Nevada Department of Employment, Training and Rehabilitation, at the time of the April 3 forum, there were 170,798 initial claims for unemployment insurance in the last three weeks of March. That number as of April 9 had jumped to nearly 245,000.

“We’re looking at 25-to-35% unemployment, potentially, coming out of this, so getting people back to work is the most urgent need for the region and community,” Kazmierski said on April 3.

HARD LOOK AT LINKAGES

Tom Harris, director of the university center for economic development at the University of Nevada, Reno, mentioned the importance of building “linkages” between rural and urban areas.

He pointed to Tesla and Panasonic’s presence east of Reno in Storey County at the Gigafactory — which produces lithium-ion batteries — and the lithium mining occurring in rural Humboldt and Esmeralda counties as a prime example of developing linkages for the electric vehicle supply chain.

“I think it’s going to make, in the future, a great promise because people are pushing green energy,” Harris said. “And some days you don’t have wind, some days you have drought, and every day you have night, so what you need is battery. That’s the common denominator, and that’s what we (as a state) can do.”

Added Herzog: “It’s those linkages and connecting through our state that I think is really going to help us bounce back in our recovery.”

Brigger went a step further and said business and economic leaders need to reach out to rural communities to “identify more of those linkages,” before adding: “We can’t lose sight of those potential linkages that we could take advantage of now and build a better future with.”

Kazmierski noted that all major business organizations across the state are working together to share information and resources during the pandemic via the Las Vegas Global Economic Alliance website at LVGEA.org.

Herzog also encourages small business owners to go here and take GOED’s COVID-19 economic impact survey.

“That information be going to the governor and will really be helping with the policy-decisions that will be used to help with programs in the recovery,” she said.