Raggio questions increase for economic development

Tuesday, March 22, 2005 | 9:33 a.m.

CARSON CITY -- Gov. Kenny Guinn's plan to increase state funding for economic development efforts ran into questions Monday from Senate Majority Leader Bill Raggio, R-Reno.

The Republican governor has proposed a grant of $9 million to be divided with 65 percent, or $5.85 million, going to the Nevada Development Authority of Las Vegas and the remainder headed for the Economic Development Authority of Western Nevada in Reno. An additional $1 million would be set aside for rural Nevada.

The Nevada Development Authority received only $1 million from the state under the current budget, Don Snyder, the chairman of the organization, said.

Raggio, chairman of the Senate Finance Committee, asked several times how the Nevada Development Authority would be spending the proposed increased funding in the next two years.

Snyder said it would go for developing a strategic plan, hiring more staff and doing more advertising. But Raggio asked for details and wants a budget by the end of the week.

Raggio also warned that "this could be one-time money. There is no assurance the funding will continue."

Snyder said the Economic Development Authority attracted 60 new companies to Nevada last year, and those companies created 1,877 jobs with an average salary of $47,000. For every $1 spent, the return was $25, he said.

Ken Ladd, past chairman of the Nevada Development Authority, said Las Vegas competes against Phoenix and Salt Lake City, and while the Nevada Development Authority has a $1.6 million budget, its counterpart in Phoenix has a $6 million budget.

Bob Shriver, director of the state Commission on Economic Development, told the committee there has been a "dramatic increase" in the number of California businesses relocating to Nevada. He said the state's $500,000 advertising budget has been spent largely California, telling companies in that state they may "go broke" because of increasing costs.

Moving to neighboring Nevada makes sense for many California companies because workers' compensation insurance and other costs are lower in Nevada, he said.

But Raggio said the figures show that a number of businesses that are promised or given incentives to come to Nevada don't stay or never re-located.

"I wonder if it is worthwhile," Raggio said.

Shriver said the state and local governments are not out any money since the prospective new businesses, if they don't fulfill the contracts, must pay the money back.

Raggio said he also wondered, "Are we getting quality companies?"

Berlyn Miller, vice chairman of the state Commission on Economic Development, said it is "very selective" in the firms it seeks. He said the development commission does not try to attract companies that pay below the state's average wage.