Nevada 3.0: Economic development
As the Legislature considers several proposals to improve the economy, the Sun askes Steve Hill, the executive director of the Governor's Office for Economic Development, a few questions in this piece. The Sun's editorial board weighs in on the state's direction. And CSN President Dr. Michael Richards writes about his views of the community college's role.
This is all part of the Sun's Nevada 3.0 project, which is looking at issues confronting the state and ways to move forward.
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Steve Hill was appointed executive director of the Governor’s Office of Economic Development in November 2011. He recently talked with Matt Hufman, editor of the Sun’s editorial and opinion pages. This is an edited and condensed transcript of their discussion.
Tell me about the past 16 months. It’s been a whirlwind, right?
Well, there’s certainly a sense of urgency. We’ve tried to pack a few years worth of work into the first year. It’s been really interesting, and I think we’ve made some progress. We have a lot left to do.
You were recently asked in the Assembly about the number of jobs created. Why aren’t there more jobs? Is it a long-term plan?
We’ve talked about this in terms of a parallel path. The standard economic development process is what it says: It’s developing an economy. It is not typically looking to solve an unemployment problem in the short-term. That’s very hard to do. It’s certainly not something our office by itself can do. That takes the private sector and all of the partners working on economic development to recover from a recession.
But besides looking at the more medium-term aspect of developing economies, we’re very focused on trying to get jobs for Nevadans now when we can.
The number of jobs that we’ve been involved in assisting come to Nevada is up a fair amount from a year and a half ago. Some of that may be our effort; some of that is probably the economy recovering, too. But that’s increased. We feel like we’ve assisted about 3,500 primary jobs in 2012. Frankly, our goal, and I think this is a stretch goal, is to assist with 7,000 (jobs) in 2013.
Where does that fit with what the governor wanted, 50,000 new jobs in his first term?
I think something that’s important to point out: When we talk primary jobs, that does not include all of the jobs in all the service industries, whether that’s construction or retail or professional services like legal or accounting or engineering. All of those jobs are in the state to support the primary industries that are there. And primary industries are primarily companies that export their products or import money into the state through their services.
But the service industries, which are probably 50 or 70 percent of the jobs in Nevada and most locations, are not what we count in those totals. So, the 3,500 jobs from 2012 also have an indirect effect of supporting all of those services industries that are out there.
One of the mistakes some states have made is giving away the farm in an attempt to get jobs in the short term. Is that a concern?
Not really in Nevada, no. The New York Times ran a series of articles about incentives that states use a couple of months ago. One of the things that was easy to see was that Nevada was 51st among all of the states and the District of Columbia in the amount of incentives that we use to attract jobs to the state. So we are certainly not leading the way in giving away the farm.
The way that we structure our incentives would really diminish the possibility of doing that. We don’t give away land. Other than the relatively minor amount we have in the Catalyst Fund (which helps businesses with relocation and expansion), we actually don’t cut any company a check, which a lot of states do with very large sums of money. And I think that’s probably where states get in the most trouble is if they actually provide the incentive without there being a performance aspect to it. Even with the Catalyst Fund, we’re doing that for the most part with performance-based triggers, so the jobs have to be there, and they have to be there over a period of time.
What do you need the Legislature to do for you this year?
One is just continue the support that they’ve already given us to help advance the effort. From a budget standpoint, we’ve asked for a little bit more money in the Catalyst Fund. One of our highest priorities is to fund the Knowledge Fund (which would provide money to help bring university research to market). We think that’s just a great way to bridge two of the highest priorities in the state, which are education and economic development.
We do have three other pieces of legislation that we’ve introduced in the Legislature that we think are important. One is to allow medical license reciprocity with other states so we can bring doctors to Nevada more quickly and more easily. We’ve got a lot of demand for that. We’ll have more demand with the expansion of Medicaid.
Right now Nevada is the only state in the West, and I think maybe one of the only states in the country, that requires relatively high-paid information technology employees be paid overtime. We’ve had several companies tell us that has inhibited them from coming to Nevada or from expanding once they’re here.
And then we’re also the only state around us that charges sales tax on aircraft parts. It is keeping the repair and maintenance on aircraft, and that can be a broad variety of aircraft. An easy example in Las Vegas is the helicopter companies that provide tours often fly their helicopters to Arizona to be repaired and then bring it back. So we’ll be looking at a sales tax abatement around the airports.
There has been a lot of discussion about economic development in Northern Nevada, especially with the Apple deal. What should we expect in Southern Nevada?
Certainly, the Apple deal made big headlines, and probably the branding opportunity for Nevada was great from an economic development standpoint. The headlines were probably a little disproportionate. I think the effort to bring Take-Two Interactive downtown will really be a driving force in conjunction with everything Zappos is doing down there, including big brand names, and what’s going on downtown is a really important part of accelerating the growth down there in the redevelopment.
A couple of weeks ago, we announced the Nevada Center of Excellence (to focus on water) in partnership with IBM and the higher education system and DETR (the state Department of Employment, Training and Rehabilitation). I think that’s a Knowledge Fund kind of project. It will allow workforce training. It will build on the assets that we have at Desert Research Institute and UNLV. I think we can build a water industry around that Center of Excellence, and that’s really the goal of entering into that partnership.
What about renewable energy?
We think there’s opportunity there. Often when people think about renewable energy, they think about the big generation projects, which are certainly proliferating in Nevada. We obviously opened the first wind facility this year. There’s continued growth of solar. A number of people, including our office, have been working with ENN (a solar company) down in the Laughlin area to try and see if we can get that really exciting project to move forward. But there’s other issues with energy that we think make sense. There’s a bill in the session right now that the Office of Energy has put forward to advance energy efficiency in buildings. We think there’s potential in further rooftop solar that not only provides the energy efficiency but jobs for a lot of construction workers who are out of work. And we’ve had several companies talk to us about developing an energy storage cluster — basically battery technology. That’s companies from here in the United States; there’s a company in China that’s looking at Las Vegas right now to do battery manufacturing. We already have a couple of companies in that field. UNLV has real expertise in battery technology and just received a federal grant to advance that.
Anything else?
I think the expansion of the international effort is really going to help the state. It will take a little time, but we have, I think, an exponentially increased level of interest from companies in the countries that we’ve reached out to. When companies in Nevada can do business overseas, they tend to be more stable, they tend to be able to pay more, weather recessions better, and there are a lot of companies overseas that want to invest in the U.S., whether that’s in a business that’s already here or bringing a part of their business to the states. We think we’re going to see some results there. And I think that’s going to be a pretty important part of what we’re doing as well.
What does that entail?
There’s really three topics there. One is to recruit companies from other countries to move a part of their operation or expand into Nevada. Another is to help companies export their products and services to markets overseas. And then the third leg of that is to bring investment money from overseas into companies and projects here in Nevada.
There are a lot of companies in (Northern Nevada) that export, but obviously there are many opportunities in Las Vegas. The fact that everyone around the world knows Las Vegas and can get to Las Vegas so easily, there’s so many conventions in Las Vegas they come to and their customers come to, it’s just a really attractive place to bring businesses.
I would imagine. The world comes here.
Yeah, it really does. When we went to China and Korea, the only thing many people we talked to knew about Nevada was Las Vegas. They didn’t even know we had a mining industry. But everybody knows Vegas and many have been here, and they realize that is a great place to have a part of their company because their customers come here as well.
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