Current
Economic Conditions
Nevada’s economy has been ravaged by the economic recession that began in December 2007. The economic downturn has required private sector employers to cut 179,400 jobs, and, at the same time, reduce hours, wages and benefits for their remaining employees. There is no precedent for these impacts in Nevada’s modern history.
Building Jobs Coalition
Northern Nevada
316 California Avenue
#159
Reno, Nevada 89509
Phone: (775) 685-6550
Southern Nevada
150 N. Durango Drive
Suite 100
Las Vegas, Nevada 89145
Phone: (702) 796-9986
info@buildingjobscoalition
1
Create the Nevada Job Bonds Support Fund, a Stable, Dedicated Revenue Source for Capital Projects »
Providing for public infrastructure is a fundamental obligation of government. Without roads, bridges, buildings, and other public facilities, businesses could not conduct commerce and individuals could not participate in their government or avail themselves of necessary services. Infrastructure is a necessity, not a luxury, and its construction and replacement should not depend on realization of unpredictable surpluses or inordinate amounts of borrowing.
| Estimated Impact |
| 11,495 |
$675,053,384 |
$1,558,296,000 |
2
Require State and Local Governments to Dedicate Annual Appropriations / Authorizations Sufficient to Properly Maintain Core Infrastructure Assets »
Only in recent years has government begun to account for depreciation of assets in its financial statements, and it is becoming clear that the state and local governments are not keeping up with major maintenance of core infrastructure. Regardless of the idea that depreciation is a non-cash expense and not always representative of the cost of actual maintenance required during the period, it is fiscally unsound to construct physical projects without specific plans to fund their upkeep and/or eventual replacement. Highlighting this issue in the current biennium based on a cursory review of financial statements reveals the following examples.
| Estimated Impact |
| 3,823 |
$224,528,248 |
$518,301,928 |
3
Eliminate Tax Rate Sunsets Dedicated to Capital Projects and Otherwise Increase Financing Flexibility Where Doing So Could Accelerate Essential Infrastructure Projects »
One example of this type of opportunity relates to the ¼ of 1 percent tax dedicated to water and waste water programs in southern Nevada. NRS 377B.100 currently requires the ordinance imposing this tax to provide for the cessation of the tax when the total sum collected exceeds $2.3 billion, or on June 30, 2025, whichever is later. The combination of the prolonged decline in taxable sales and the long-term needs for water and wastewater capital investment has rendered the original projections for this financing program obsolete. Consideration should be given to repealing the sunsets for both the dollar amount and the time frame. This strategy could be immediately effectuated by amending NRS 377B to remove the sunset on ¼ cent water and wastewater infrastructure tax in Clark County.
| Estimated Impact |
| 3,077 |
$180,721,002 |
$417,177,103 |
4
Require Local Governments to Provide a Streamlined Permitting Process and Permit and Planning Fee Abatements for Reuse or Improvement of Underutilized Real Property Assets »
Planning hurdles create a formidable obstacle for construction, development and design industries. At times, developers may have an opportunity to convert a vacant or underutilized property to a higher or better use, but they cannot because antiquated regulations do not permit the conversion, or obtaining the desired use permits is such a long and costly process that it makes the project impracticable or infeasible. One potential strategy would be to mandate an accelerated process and to abate permitting and planning fees where a project meets a set of established criteria such as: (1) puts underutilized property to a higher and better use; (2) the project would be completed in less than 12 months; and (3) the project would create more than 50 net new Nevada jobs.
| Estimated Impact |
| 3,483 |
$204,561,671 |
$472,211,000 |
5
Index the Motor Vehicle Fuel Tax Imposed on the Sale of Motor Vehicle Fuels Statewide, Directing Additional Funds to Local Transportation Infrastructure Programs »
Presently, all fuel taxes, except those in Washoe County are flat amounts per gallon, effectively restricting growth in revenue to growth in number of gallons sold, a manner of taxation unresponsive to increases in vehicle fuel economy and the cost of construction.
| Estimated Impact |
| 5,192 |
$304,899,484 |
$703,831,219 |
Require a “Yellow Pages” Test for All State and Local Government Development, Design and Construction Projects »
Many local governments and state agencies have internal design and development groups. Additionally, certain state and local maintenance crews have developed at least some construction capabilities. Utilization of these groups may or may not provide the best value, highest quality or lowest cost for these services nor is the use of internal workforces uniformly in the best interest of the public at large. The recommended policy is to utilize competitive private sector service providers for these services, whenever possible, with government maintaining a project administration, management and oversight role.
| Estimated Impact |
| 3,483 |
$204,561,671 |
$472,211,000 |
This strategy would require that state agencies, local governments, special districts and joint powers authorities solicit proposals from the private sector for design, development and/or construction-related projects, and then determine the best source for procuring these services in accordance with the public interest, efficiency to the taxpayer and greatest value for the project.
In the case of services and/or products not governed by NRS 625.530, a cost and value comparison analysis could easily be made using internal cost analyses, including indirect and overhead costs, compared to the cost of outsourcing the services. Further, the results of such cost comparison and recommended decision on sourcing for the subject procurement could then be appropriately made at a public meeting. Where the cost to outsource the project is lower than the inclusive internal cost, the agency, municipality or district could be required to either outsource the project or provide substantive rational judgment for the use of the higher cost provider.
In the case of procuring professional design services, procurement policy for state agencies, local government, special districts and joint powers authorities, the objective should be to utilize local, Nevada-based firms whenever possible and feasible. The internalization of professional design services, specifically engineering, inspection and surveying services, may also be limited to those projects and services for which the private sector lacks expertise, experience or capacity. In the case of procuring professional design services addressed in NRS 625.530; state, local and special districts, and joint powers authorities, should consider following a qualification-based selection process, as prescribed in NRS 525.530, providing at least a 10-percent preference for local, Nevada-based professional firms. Furthermore, any new projects funded, in whole or in part, by the adoption of new funding sources in the 2011 legislative session that require the services of a person licensed pursuant to NRS Chapter 625 for the performance of any engineering or land survey services should consider licensees employed in the private sector.
Streamline and Consolidate Workforce Development and Economic Development Functions Statewide »
Economic development in Nevada today is as much about retaining businesses currently operating in the state as it is attracting new businesses to the state. Both require improvements in the depth of the current labor pool, a means to provide a consistent message, and a cooperative effort with state and local stakeholders in the public and private sectors. Moreover, workforce development programs receive significant support in the way of federal grants, which could be more effectively leveraged in a broader economic development context.
| Estimated Impact |
| N/A |
N/A |
N/A |
Prohibit Interest Earnings in Capital-related Enterprise Funds from Being Transferred to the Operating Accounts of Local Governments »
At present, interest earning within enterprise funds for water, sewer and other capital-related local government programs can, and often are, transferred out of those enterprise funds at the end of each year and into the operating accounts of local governments. This not only takes money away from those capital construction accounts, but it violates the spirit of why an enterprise fund is created in the first place and results in higher fees and charges for enterprise services. This practice should be eliminated.
| Estimated Impact |
| N/A |
N/A |
N/A |
Create a User-based Funding Mechanism to Support the Construction of Transmission Lines so Power can be Transferred From Where it is Harvested to Where it Can Be Used »
Nevada cannot exploit its competitive advantages relative to renewable energy without having the ability to move energy from where it can be harvested to where it can be used. The estimated cost to build out an integrated and comprehensive power transmission system in Nevada is $2.1 billion. At this cost, near-term development is prohibitive. This strategy would impose a fractional charge escalating to an estimated 0.6 cents per megawatt hour by 2016 on all power users, which, when applied to the 35.1 billion kWh generated in Nevada generates roughly $225 million per year. These funds would be used to repay a revenue bond issued to fund the construction of the transmission infrastructure master plan over a 28-year period. Once the bond was fully repaid, money generated from the surcharge could be used to “buy down” the cost of energy for Nevada residents and businesses.
| Estimated Impact |
| 24,382 |
$1,431,931,872 |
$3,305,477,404 |
Create Industrial Hubs with Development and Transmission of Clean Energy, Transportation, and Communication Capabilities »
Nevada’s combination of open spaces and access to highways and rail transportation offers opportunities for the creation and transmission of clean energy as well as for other industries. In northern Nevada, a site is already under development that is in close proximity to geothermal power, rail transportation, Interstate 80, Highway 95, and Highway 50. Geothermal power will complement the availability of other utilities and provide cost savings to industries locating at the site. Entitlements and permitting processes are well underway, with construction scheduled for 2011. The potential for similar development in southern Nevada is immense. For example, the Interstate 15/Highway 93 corridor includes significant open space and rail capacity, a gas pipeline, utility corridors, and opportunities for partnerships for delivery of water and wastewater services. Development of solar energy is already contemplated. Other energy technologies, including gasification of waste, could not only be developed at such industrial hubs, but could power them and offer opportunities to augment existing power sources on the grid.
| Estimated Impact |
| 14,562 |
$855,217,247 |
$1,974,187,000 |
Require the State of Nevada to Produce and Publish a Rolling Five-Year Capital Improvement Plan in the Same Manner as Now Required for Local Governments in NRS 354.5945 »
Currently, the Executive Budget presents only a two-year capital projects plan, now funded largely with increased debt. Funding for this plan generally relies on the projected capacity of the state to sell additional bonds based on past increases in property values and retirement of old debt. The combination of declining property values and short-term thinking in the state’s capital projects planning now leaves Nevada with virtually no capital funding structure and no long-term plan, despite the continuing need to serve the public.
| Estimated Impact |
| N/A |
N/A |
N/A |
Requiring presentation and Legislative approval of a documented five-year capital plan, including description of projects and proposed funding sources for each, would encourage deliberation of capital projects and funding beyond the next biennium, and would guide the preparation of each budget in a more rational manner. The rolling five-year capital plan would be subject to update and amendment during each legislative session, and the first two years of each such plan should reconcile to the actual funding appropriated and authorized by that session of the Legislature. Funding for years beyond the first two may be estimated, may be described as undetermined, or a combination of both. Objections to this proposal may arise in that no Legislature can dictate the actions of a subsequent Legislature, and that that the state budget covers only two years, not five. However, local government five-year plans already extend beyond both the budget and election cycles; and experience at the local level demonstrates such concerns are without merit.
Require Local Governments to Include a Schedule in Their Annual Capital Improvement Programs that Shows the Funding Status for All Projects Under-Construction or Planned for Development in the Prior Year »
Local governments are currently required to file rolling five-year capital plans, and most local plans are in full compliance with the relevant statutes. Nevertheless these plans could be enhanced by requiring all entities to provide all the information that some already include. This strategy could be effectuated by amending NRS 354.5945 to require the listing for each capital project to include its original cost estimate in addition to its current cost estimate and any remarks as to significant differences such as change in project scope, bids received, etc., as well as the cumulative amount disbursed in years prior to the years covered in the five-year plan. In addition, local entities should include projects and estimated costs that are deemed by the governing board to be necessary or likely to be necessary, but for which a source of funding is not yet known.
| Estimated Impact |
| N/A |
N/A |
N/A |
Prohibit the Use of any Dedicated Capital Dollars for the On-Going Operations of State and Local Governments and Keep Outside the Reach of Collective Bargaining Agreements »
Budgeting for capital infrastructure is an integral part of prudent public policy. Without infrastructure, services cannot be effectively and efficiently provided. The State of Nevada as a whole has drifted into the disastrous habit of raiding state and local capital funds in order to meet state operating expenses including payroll. The state has collapsed its own capital program to maintain operating costs, and is relying increasingly on diversion of local capital dollars. The Clark County School District has lost $45 million in school capital, the Southern Nevada Clean Water Coalition is in court over $62 million for water infrastructure, and Clark and Washoe Counties have lost $60 million in road money this biennium alone. Combined with curtailment of capital investment at the local level, this trend has, with few exceptions, virtually ceased construction of public projects – projects which put people to work and provide the public with needed infrastructure.
| Estimated Impact |
| 1,544 |
$90,701,624 |
$209,376,000 |
This strategy could be effectuated by amending NRS 354 to (1) declare money in the capital projects fund is not available for any other purpose, and may not be used to settle or arbitrate contracts negotiated under NRS 288 or disputes related thereto. And (2) prohibit local governing boards from transferring money, regardless of its source, from the capital projects fund to any other fund.
Dedicate a Set Percentage of State General Fund Reversions to Economic Development Programs »
An essential element of Nevada’s economic recovery is the ability to attract new businesses and retain existing employers. At roughly $5 million per year, this effort is underfunded relative to the needs of the state and in comparison to other states. This strategy would dedicate 50 percent of general fund reversions in each year to economic development programs. This allocation would be capped at $25 million, and the available money would have to be used for the outreach, advertising and marketing efforts associated with attracting and retaining employers. It should not be used for wages, salaries, or benefit payments for economic development employees.
| Estimated Impact |
| 10,074 |
$591,629,516 |
$1,365,720,000 |
Restructure State Economic Incentives to Favor Employee Training Programs »
Incentives are an important tool for Nevada’s regional economic development agencies; however, they may not mirror the state’s current needs. The state may want to consider changing its relevant economic development abatements and incentives to focus more on existing employee training and retraining rather than reduced tax payments to new and expanding businesses, at least in the short run (i.e., next 5 to 7 years).
| Estimated Impact |
| N/A |
N/A |
N/A |
Create an Economic Incentive Program for Businesses that Work to Attract Their Suppliers to Nevada »
Economic development is not only about attracting new types of industries to the state, but it is also about making existing Nevada businesses more efficient. One way to do this is to evaluate what services and supplies are being purchased by Nevada businesses from outside the state. Nevada should review and analyze the out-of-state purchases made by the state’s largest employers, actively solicit those businesses to relocate or expand into Nevada and give those existing Nevada businesses that are successful in helping to attract their suppliers into the state a payroll tax break equal to the amount of the new payroll tax being paid by the relocating business for a period of five years.
| Estimated Impact |
| 9,579 |
$562,544,487 |
$1,298,580,000 |
Research-to-Results Program: Make 20 Percent of University System Funding Competitive Based on Economic Development Outcomes »
Currently, higher education funding is essentially driven from a base of current expenditures, plus enhancements, minus cuts, or both. Periodically, proposals are brought forth and justified to some degree by the prospect of economic or workforce development. However such justification is the exception rather than the rule.
| Estimated Impact |
| 1,376 |
$80,822,937 |
$186,572,000 |
A procedure could be adopted by which all or a portion of Nevada System of Higher Education (NSHE) funding could be predicated on economic development impact. This could be accomplished by automatic reduction of the current level of NSHE funding by at least 20 percent, and requiring NSHE and the Legislature to determine the priority of programs restored based on economic impact. The challenge arises from the question of which 20 percent is reduced or made subject to such justification. If it is the 20 percent that can be demonstrated to have positive impact, restoration is easily justified. An alternative would be to make all programs of NSHE subject to justification according to economic impact.
Create a Job Corps for People Receiving Unemployment Insurance Benefits Longer than 20 Weeks »
At present, there are statutory limitations relating to what can be asked of out-of-work persons collecting unemployment insurance payments in terms of community service and/or mandatory job training/retaining programs. Wherever possible, these laws should be changed to encourage contributions and self-help mitigation efforts by those collecting these payments from the state.
| Estimated Impact |
| N/A |
N/A |
N/A |
Modify the Millennium Scholarship Program to Offset Tuition Costs for Students Concentrating In Science, Technology, Engineering and Mathematics Programs Who Remain in Nevada for at Least Five Years after Graduation »
Economic development is going to come from innovation; innovation is going to come from occupations requiring skills in math, science, engineering, and technology. The Millennium Scholarship Program should be modified to provide a greater incentive to students pursuing careers in innovation sectors of the economy and who plan on staying in Nevada.
| Estimated Impact |
| N/A |
N/A |
N/A |
Consider the Creation of a Private Equity Program, which Invests Selected State Funds in Qualifying Private Equity and Venture Capital Firms, that Then Invest in the State’s Innovative Companies (Similar to Program in New Mexico) »
Partly due to the presence of federal research labs, research and development (R&D) activities account for more of the New Mexico economy than any other state and the state houses a high concentration of STEM (science, technology, engineering and math) jobs to support this activity. In order to better capitalize on these activities, New Mexico’s legislature passed a Research Applications Act to establish a research center to more readily move technologies developed at the state’s federal labs into the marketplace. The New Mexico Private Equity Program invests the state’s severance tax permanent fund in qualifying private equity and venture capital firms, who then invest in New Mexico’s innovative companies. The state investment requires a private match to the state allocation, allowing New Mexico to leverage its resources while providing private capital access to innovative local firms. With the support of the New Mexico Private Equity Investment Program, more than $350 million in capital has been committed to 22 funds that directly benefit New Mexico businesses, typically in the technology sector in the Albuquerque area. Nevada may be able to do something similar with one or more of its funds.
| Estimated Impact |
| 7,018 |
$412,140,578 |
$951,387,000 |
Take Steps to Mitigate the Impacts of Unnecessary Construction Defect Litigation Claims »
Spurious construction defect claims continue to be an issue for Nevada, unnecessarily constraining the development of multi-family housing in both Clark and Washoe County and creating unfavorable situations for homeowners drawn into class-action law suits that all too often result in little more than labeling their homes “defective.” Many contractors are reporting that even though the strongest demand for housing in smaller attached product types, they cannot build them because insurance is unavailable or makes the project infeasible and it is a near certainty that they and most of their subcontractors will be sued after the project is completed. As the economy recovers, this trend is likely to limit not only the number of potential development projects but also access to entry-level housing for some segments of the state’s population.
| Estimated Impact |
| N/A |
N/A |
N/A |
Create an iHub System, Leveraging Assets Such as Research Parks, Technology Incubators, Universities, and Federal Laboratories to Provide an Innovation Platform for Startup Companies, Economic Development Organizations, Business Groups, And Venture Capitalists (Similar to the Program in California) »
The iHub initiative, now in its second round, is intended to modernize California’s national and global competitiveness by stimulating partnerships, economic development, and job creation around specific research clusters through state-designated iHubs. The California iHub Initiative is designed to promote collaboration, create employment opportunities, shorten the commercialization process and attract funding for technology. The “i” in iHub represents the words innovation, inspiration, invention, ingenuity, and investment. iHubs are operated by local collaboratives comprised of government entities, universities, businesses, venture capitalist networks and economic development organizations. Specifically they target young, innovative companies that have been in business for less than eight years in a technology cluster identified by the local consortium. They are anchored by at least one major university or research center/institution, at least one economic development corporation and typically contain assets such as research parks, technology incubators, universities, community colleges, business accelerators and federal laboratories. Certified iHubs are supported by a UC Institute for Science and Innovation. Nevada may be able to do something similar, particularly along the lines of making university assets available to qualifying companies.
| Estimated Impact |
| N/A |
N/A |
N/A |
Create Aggressive Tax Credits for Start-Up Companies in Research and Development (Similar to Utah’s Centers Of Excellence Program) »
In order to better facilitate technology transfer from the state’s universities to the private sector, Utah has implemented a system of licensee grants through its Centers of Excellence program. Since 2007, private sector businesses, including startups, have received grants from the state to aid them in bringing technology developed at the state’s universities to market, creating new products, companies, and spurring job creation in the technology sector. The state has rolled out aggressive tax credits focusing on reducing risk for investments in research and start-up companies. The Centers of Excellence Program is a state-funded grant program developed by the Utah Legislature in 1986 to help accelerate the process of taking university-developed cutting-edge technologies to market, thereby driving economic development and creating jobs for the state’s residents. Historically, the COE statute only permitted grants to Utah universities, however, in 2007 the Legislature passed and the Governor signed into law, changes to the COE statute that now permits grants to companies who license technology developed at Utah's colleges and universities, including startups as well as existing companies who plan to create a new product or product line from the licensed technology.
| Estimated Impact |
| 5,000 |
$294,954,857 |
$680,875,000 |
Create a Nevada Modified Business Tax Credit of Up to 10 Percent of Total Liability for Any Nevada Business that Invests in a Small Business Involved in Research and Development Within Nevada »
Nevada lacks venture capital. This strategy is designed to create an incentive for private industries to invest in new ventures. While it would reduce the state’s total tax receipts, this strategy is expected to be more than offset by the reduced unemployment and increase tax payments by new businesses.
| Estimated Impact |
| 1,277 |
$75,005,932 |
$173,144,000 |
Establish a Nevada World Trade Center at UNLV or UNR and a State International Trade and Diplomacy Office Designed to Focus on Connecting Nevada Industries to International Markets; Create an Aggressive Tax Incentive for Businesses Exporting Goods and Services to Emerging Markets Such as China and India »
Growth in US domestic product is expected to be 2 to 3 percent annually. Growth in emerging markets like China, India, and Brazil are expected to average 9 percent or higher. Helping Nevada businesses access these markets will be critical to their long-run competitiveness.
| Estimated Impact |
| N/A |
N/A |
N/A |
Create the Nevada Job Bonds Support Fund
Require State and Local Governments to Dedicate Annual Appropriations / Authorizations
Eliminate Tax Rate Sunsets Dedicated to Capital Projects
Provide a Streamlined Permitting Process and Permit and Planning Fee Abatements
Index the Motor Vehicle Fuel Tax