To the dozens of business leaders attending UNLV’s “Las Vegas at the Crossroads” panel on how to fix Nevada’s economic woes, there’s no question that the diversification of the economy is the key solution to the state’s problems.
At issue is how the state should implement a policy and some of the details of such a policy.
In Thursday’s panel discussion sponsored by the UNLV College of Business Economic Department and the Economics Advisory Board, five experts led a conversation with about 70 businesspeople that explored just how bad the state’s economic climate is, how “clustering” can bring synergistic industries and companies together in a region, how the state’s tax policy goes hand-in-hand with economic diversification and how the state’s lawmakers will need to commit resources to fix the problem.
A number of business organizations and economic think tanks — the Nevada Development Authority, the Las Vegas Chamber of Commerce, the New Nevada Task Force and Brookings Mountain West among them — have issued policy statements suggesting some form of clustering to build economic diversification.
Ken Heck, a wealth management adviser and vice president at Merrill Lynch in Las Vegas and the moderator of the panel, said the historic development of Las Vegas has been a form of clustering.
“Nobody had an argument (against) the clustering idea,” Heck said. “It’s worked in the past and it’s how we developed as a city. We had gaming. We had to put rooms around it. People have to eat. And when they’re not gaming, they can go to a show. And they can buy things. That’s a cluster.”
Panelist Stephen Miller, a professor of economics and department chair for UNLV’s College of Business, said local leaders need to seek out potential clusters for Southern Nevada, and he offered a list of prospects that could become as important to Las Vegas as the nation’s most successful business cluster — Silicon Valley — has been for the San Francisco Bay area.
As a growing mecca for retirees, Las Vegas could be a home for hospital and health-related service industries and because of Nevada’s vast open spaces, it could be home to disaster-mitigation companies, complimentary services for homeland security, and information and communications technology, Miller suggested. The state’s climate, he added, is conducive to renewable and alternative energy clusters.
Miller said most clusters on his list would make excellent partners with the state’s higher-education community.
Panelist Richard Lee, vice president and director of public relations for First American Title, said longtime Southern Nevadans would need to reset their goals and temper their expectations of the future after experiencing years of growth and an attitude that Las Vegas was too big to fail.
“In June 2004, we went way above the trend line,” Lee said. “Now, it’s like watching a slow-motion wreck. But the good news is that all recessions are followed by a recovery and now, it’s just a matter of waiting for the next big thing. It’s another chance to grow into one of the world’s great cities.”
Part of the challenge of sharing Las Vegas’ growth potential is convincing state lawmakers to invest in marketing Nevada’s potential, said panelist Glenn Christenson, managing director of Velstand Investments, a longtime chief financial officer in the gaming industry and chairman of the Nevada Development Authority.
Christenson recommends that a coalition of economic development backers meet with the state’s political leaders before the Nevada Legislature convenes in February and convince lawmakers that the state needs to beef up its budget to advertise the pluses of bringing a business to Nevada.
He said that while the state’s Commission on Economic Development has a budget of about $1 million a year, competitors like Michigan and Utah spend between $25 million and $40 million a year to boost their respective states.
“We need to rethink what we need to do in this community,” Christenson said. “I can’t tell you how much money we’re going to need, but it’s going to be substantial. We’re a well-kept secret in terms of the business opportunities that we have here. You always hear about what goes on in Vegas, stays in Vegas, and we’ve done a great job in telling people that our entertainment is like no other place in the world. But we haven’t said much about what the business climate is like.”
Experts concur that could be an uphill fight as lawmakers will be staring at a budget deficit of about $2.9 billion, based on revenue and appropriations projections, said panelist Guy Hobbs, co-founder of Hobbs, Ong & Associates and acknowledged as one of the state’s experts in tax policy.
Hobbs said the competition for state funding will be a challenge because 80 cents of every dollar spent in tax revenue goes to education or health and human services. That, Hobbs said, is why he thinks it will be critical for lawmakers to take up tax policies when they consider economic diversification for the state.
While Heck discouraged the discussion from turning into a political debate — business people with conservative and liberal political views were represented at the meeting — he acknowledged that politicians are going to have to be willing to compromise for the state to solve its economic diversification problems.
“Some of the politicians won’t say what their priorities are, and I understand why they do that,” Heck said. “But I think most people are willing to say that our economic situation is a legitimate crisis and
Nevadans seem to come together in a crisis.”
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