Restoring Nevada's economy back from the ongoing COVID-19 pandemic is less likely to be a quick turnaround and more likely to be a “long and grinding affair,” a top state economic development official said Tuesday.
Nevada's hard-hit economy and record high unemployment rate will not recover overnight, Governor's Office on Economic Development (GOED) Director Michael Brown said during the development board's meeting on Tuesday — its first this calendar year.
Brown, the former head of Barrick Gold USA, said the COVID pandemic has forced GOED to reflect and find ways to adapt to the new economic reality.
He reiterated that every state is facing major financial difficulties, and that those best positioned to succeed would need to do the nitty-gritty tasks of workforce development rather than look for a silver bullet to solve economic woes.
“I was at Ohio State when Woody Hayes coached football. His wins were achieved by consistently grinding out three yards and a cloud of dust,” he said. “The game will not be won by wildly throwing forward passes. The state with the best running game will most likely win the economic development game.”
Brown, who was appointed to lead GOED last summer, said that in March the office had shifted into helping the state respond to the pandemic, with staffers dispatched to help directly with economic recovery issues, emergency response and development of guidelines for non-essential business determinations.
Brown said that with the state entering a Phase 2 of business reopenings, most GOED staff were returning to their normal operations. He said that while the state needed to focus on workforce development for sustained economic recovery, already GOED had heard from several businesses looking to relocate from Asia or other states, which could help speed up the recovery.
“Right now we're trying to determine if those early signals lead to real interest in real deals, and I hope to bring some of those to the board in the summer,” he said. “We're prepared to move the ball down the playing field.”
The Tuesday meeting marked the office's first board meeting since December 2019, where Gov. Steve Sisolak promised major changes, including potentially raising the wage standards needed for companies to qualify for the state's slate of tax incentives and abatements.
The current version of the state's economic development board was put in place by former Gov. Brian Sandoval in 2011, revamping the agency into a clearinghouse for hundreds of companies to receive abatements on sales and use taxes, property taxes and payroll taxes as long as they met certain capital investment, jobs created or minimum hourly wage targets.
But the effectiveness of the system has been questioned by Sisolak and others; a Nevada Independent assessment last year estimated that roughly 13,000 employees of businesses that have received incentives from the state had incomes low enough to qualify for Medicaid.
Brown also referenced the state's planned upgrade to its 2012 economic development blueprint — a previous version published in 2018 went unused for more than a year — also had to be rethought.
“We were working on a five-year economic development plan, we turned to (think tank SRI International) and said to (SRI Director) Roland Stephen, we're going to need an 18-month recovery plan because the world has truly moved into a place that hasn't been,” he said.
SRI International's recommendations for the state were listed in a presentation given by Stephen to the board, which included some typical economic development recommendations — focusing on advanced manufacturing and clean energy sectors — as well as some more distinctive proposals.
These included items such as fully funding a state infrastructure bank, creating a sovereign wealth fund (a state-owned investment fund, such as the federal Social Security Trust Fund), changing property tax cap limits and attempting to create a “remote work playground,” with high-quality housing, outdoor recreation and other entertainment options.
“You're in the trenches, we're up against something which I've never experienced in my life that I don't believe anyone else has. It's terrifying in the uncertainty,” Stephen said. “But in the medium term, the leadership in the state must start thinking about the mountaintops, where are the opportunities?”
But the state's budget woes may make it difficult for state leaders or lawmakers to take action on those recommended changes. During the meeting, a robust debate broke out over an agenda item allocating $2 million to the College of Southern Nevada for an advanced manufacturing training program that led to a rare split vote.
The agreement will set up an advanced manufacturing training program at the community college in conjunction with Haas Automation, a large-scale machine tools manufacturer that recently bought land for a factory in Henderson. The dollars will largely go to purchasing equipment and preparing training materials and laboratories for students
“Of all the things you could be spending money on right now, this has to be the absolute top of the list,” Stephen said.
But in a rare occurrence, the agenda item was approved on a 7-2 vote, with board members Secretary of State Barbara Cegavske and Touro University's Dr. Don Havins voting against the recommendation. Cegavske said she had no qualms with the project idea, but thought approving the spending would send the wrong message in light of the state's ongoing budget woes.
“In light of where we are, I don't think I can support giving $2 million to an entity, any entity,” she said. “The governor's pulling back stuff, and I'm just really concerned about where we are and where we're going.”
The Nevada Independent is a 501(c)3 nonprofit news organization. The following people or entities mentioned in this article are financial supporters: Brian Sandoval - $480.00; Michael Brown - $850.00; and Steve Sisolak - $3,200.00.