GOED leader: ‘It’s time’ for Nevada to reevaluate tax abatements | nnbw.com

GOED leader: ‘It’s time’ for Nevada to reevaluate tax abatements

Rob Sabo

Special to the NNBW

“We are going to take a review of the incentives programs that exist in Nevada,” says Michael Brown, the new executive director of GOED. “It’s time.”
Courtesy photo

RENO, Nev. — Michael Brown, the recently appointed director of the Governor’s Office of Economic Development, keeps a bunch of newspaper clippings pinned to a whiteboard in his office that serve as daily reminders of key goals and aspirations.

A front-page story from 2010 from the Reno Gazette Journal asks, “Is Reno on Track to be the Detroit of the West?” Commenters ponder if regional home values — at that time down more than half of 2006 levels — would return by 2025. Most disagree, so strong was the grip of the national recession on Northern Nevada.

A decade later, the region’s bullish economy — and its ever-increasing housing prices — have far surpassed anyone’s wildest expectations. With the extended economic recovery showing no signs of slowing, GOED has begun updating the state’s 2012 Economic Development Plan to bring in more in line with the state of Nevada’s economy.

GOED is partnering with Brookings Mountain West and consultancy SRI, both who originally authored the original document, to update the document that serves as the legal guidance for GOED’s efforts in the state.

Why it needs to be done

Nevada’s current economic plan was written in 2011 and released in 2012. The plan was based primarily on information available to authors in 2010. So much has irrevocably changed since then, especially for Northern Nevada.

Proposed updates will be natural extensions of the original plan, Brown says. When viewing the state holistically, Nevada is split into three main areas:

  • Southern Nevada
  • Northern Nevada, including Reno-Sparks, Minden-Gardnerville and Carson City
  • Rural Nevada, with mining counties parsed from non-mining counties

GOED plans on presenting a formal plan in June.

Several neighboring states recently updated their economic development plans, Brown notes, and with a robust national economy it’s a good time to revisit the original document and enact key changes.

“States are truly using this moment to pause and redraft their goals and objectives,” Brown says.

Workforce development

Workforce development will be a key component of pending plan updates, Brown says.

The influx of new residents to Nevada, particularly in the state’s northern regions, has left large gaps in medical services and medical providers that are proving challenging to fill.

When looking at the top 100 jobs needed to match the state’s flourishing economy, Brown says the No. 1 need is for additional trained nurses and medical technicians.

“We need to put a much greater emphasis on our workforce and workforce development to make sure we have a pipeline of workers that match our jobs,” he says. “We will see much greater emphasis on programs that train and educate the workforce we need.”

Mike Kazmierski, CEO of the Economic Development Authority of Western Nevada, says workforce development is a top priority for EDAWN as it begins to navigate the new decade.

“It’s important for regional development agencies to work together to grow the economy and prepare the state for the next generation of jobs coming as a result of the fourth Industrial Revolution (automation, AI and robotics),” Kazmierski says. “The state plan will likely include efforts to upskill our workforce and invest in our education system to ensure Nevadans have the skills needed to fill the next generation of jobs we are working so hard to attract and grow.”

Tax incentives in the crosshairs

Another focus area in the updated economic plan will address the way the state delivers incentives to businesses.

A proposed model for state tax incentives moving forward is that they target specific concerns and needs rather than just subsidizing corporations to compel them to choose Nevada through tax abatements, Brown says.

“We are going to take a review of the incentives programs that exist in Nevada,” he says. “It’s time.”

“The Governor has strong concern about abating any school taxes at a time when we are struggling to fund our public schools,” Brown adds. “We will be doing a competitive analysis (looking at) where we are versus other states. In a state that’s challenged to fund education, we have to consider just how much we can afford to abate the taxes we use to fund education.”

The most notable tax abatement in state history was the $1.25 billion tax incentive package the state gave to Tesla back in 2015. While many question the merits of that decision, there’s no denying that Tesla’s Gigafactory east of Sparks was the spark that fully ignited Northern Nevada’s economic engines.

GOED’s focus moving forward

GOED enjoys strong partnerships with Nevada’s regional economic development organizations, including the EDAWN, Northern Nevada Development Authority, Northeastern Nevada Regional Development Authority and others, Brown says.

Prior to 2011, most economic development entities worked in silos. An unreported goal of the 2012 State Economic Development Plan was that it unified Nevada’s primary economic development entities into one cohesive unit.

GOED’s strong research department also is expected to play a much larger role in identifying, researching and disseminating information about workforce development, employment and other key trends.

“You are going to see more of a policy focus here as we attempt to address these challenging issues,” Brown says. “We are going to be much more .gov than .com. If we get the policy right, then we can address workforce and job issues.”