State flunks economic development study

Kevin Rademacher

Wednesday, Dec. 8, 2004 | 11:16 a.m.

Nevada is failing in its efforts to support economic development with a qualified workforce, affordable housing and university research, a new study said of the state.

In Nevada's most recent Economic Development Report Card -- produced by the Washington-based Corporation for Enterprise Development -- the state was given an F for its development capacity, down from a D grade in 2003.

Nevada maintained a D grade, year over year, for its business vitality and improved from a C to a B in performance.

In compiling the grades, the CFED examined 68 different ranking criteria, which produced a mixed bag of results for the Silver State.

"The state continues to be the best in the nation in long-term employment growth and enjoys relatively low mass layoffs," the report card said. "In addition the state still manages to have steady short-term employment growth and minimal unemployment."

Other strengths included highway performance, low poverty rate, short commutes, number of new companies and income distribution, the report said.

Still, the report outlined a series of shortcomings.

"Little improvement can be seen in Nevada Development Capacity Index, which drops to an F," the report said. "The state has a D in human resources, falling behind in basic educational skills in reading and math. ... The costs of urban housing and energy remain relatively high. Nevada also needs more university spin-outs, royalties and licenses, as well as university research and development."

Other weaknesses for Nevada included K-12 educational expenditures, college-level educational attainment, air quality, homeownership rate, uninsured low-income children, industrial diversity and the high number of business closures.

Bob Shriver, executive director of the Nevada Commission on Economic Development, said the CFED study penalizes Nevada for what most consider advantages.

Those knocks include government loans to businesses and other funding issues that are supported in many states through corporate taxes. In Nevada, he said, the low-tax environment rules out many of those funding streams but creates an overall attractive location for start-up businesses.

"To us, we consider those things as a plus," Shriver said.

He pointed out that the states that ranked the highest in all areas -- Connecticut, Delaware, Massachusetts, Minnesota, New Hampshire, Oregon, Virginia and Wisconsin each received A's or B's in all main categories -- are typically noted for high corporate taxes.

Shriver also said the rapid growth of Nevada's -- and particularly Las Vegas' -- economy has outstripped some educational resources. Still, that growth, he pointed out, is what drove many of the high grades for performance, including employment, earning and job quality.

"It doesn't reflect the growth at all, really," Shriver said of some of the study's low marks for Nevada.

Still, he said the state will not ignore the shortcomings.

"Does it point out areas we want to improve on? Absolutely," Shriver said.

Jessica Thomas, a program manager for CFED and co-author of the report card, said the survey was done without input from state officials. Instead, she said, it was compiled through national data. She also said that CFED does not take a position on how states should go about addressing such policy issues as education funding and business loan programs.

"We would definitely advocate for states to use the report card to look at where policy changes need to occur, but what those policy changes are, that's up to the states," Thomas said. "Each state also needs to take a look at where their strengths are and where they can capitalize."

Keith Schwer, director of the UNLV Center for Business and Economic Research, characterized the study as something of a beauty contest.

"People differ in what they prefer," he said. "And most of those beauty contests don't look at the whole picture ... You either give Nevada an A because you don't pay taxes, or you give Nevada an F because the state doesn't pay out a lot of money in programs."

Schwer said the best grade may come from the thousands of people that continue to move into the state.

"You are either going to say the 7,000 or so people moving here a month for the last 10 or 12 years don't know what they are talking about, or they may have some clue that they are better off when they get here," he said.