An Apple a Day...

In June, we had questions about Apple's planned data storage center for Washoe County. Now, it's starting to look like we're not the only ones.

Hill, the director of the Governor’s Office of Economic Development, approved the abatements worth $89 million over 10 years on Wednesday. That was after a separate meeting in which the board unanimously recommended approval of the deal.

But their role was purely advisory — a break from the way Nevada has historically given out tax breaks. [...]

There is still no contract between the state and Apple, Hill said, only a short list of terms laying out the property and sales tax abatements and conditions to which Apple has agreed.

That drew sharp questions from Secretary of State Ross Miller, a member of the board.

“It appears the board is largely ceremonial,” Miller said after the meeting. “This is a significant departure from the past.”

He took issue with the property tax provisions that could last up to 30 years.

“My daughter, who’s in kindergarten, will be my age and still subject to the deal approved today,” Miller noted.

Remember, Apple is being given $89 million worth of tax breaks. The state discounted 85% of property taxes for up to 30 years. The state also discounted all but 2% of the state sales tax for at least 4 years and up to 12 years. And Washoe County reduced Apple's effective county sales tax to a mere 0.5%. Apple got quite the sweet deal... And there's still no official contract?

Perhaps Brian Sandoval and Steve Hill think that if CCSD can try breaking a contract with teachers, they might as well try doing no contract at all with Apple?

I don't know what else to say. I'm just reminded of what I said back in June.

Let's be real here. If this were an everyday working class Nevada person getting a sweetheart deal like this, many if these same politicians would be aghast in horror as they'd be taking their queues from teabaggers screaming, "WELFARE!!!! WELFARE!!!!!" Well, where are the teabaggers to call out the corporate welfare that the State of Nevada, Washoe County, and City of Reno are about to bestow upon Apple? So "WELFARE!!!!!" is evil if it's a working poor family trying to survive in this rough economy, but it's A-O-K for a multinational corporation like Apple? Sorry, but this is the most blatant and disgusting double standard I've ever seen!

Let's be honest here. Apple struck while the iron was hot and took advantage of Brian Sandoval's willingness to cut any kind of deal to save face and show Nevada that "he means business". Apple wins in opening a new data storage facility and paying hardly any taxes on it, while California continues to lose in not being able to collect the corporate income tax it's otherwise owed. Nevada, meanwhile, continues to be satisfied with mere economic crumbs.

So we're willing to shower all this corporate welfare on Apple, but we're not willing to invest in our own people? We're willing to give Apple all the tax evasion bailouts welfare "special deals" it wants, but we're not willing to look out for our own long term economic health? Nevada, we have a problem. And it's more serious than you think.

What I Mean by "Penny Wise, Pound Foolish"

Congratulations, Nevada. We rank at the bottom of yet another list (that we shouldn't be at the bottom of). This time, Ball State University gave us a "D" in logistics. And surprise, surprise, the reason why is our lack of proper public infrastructure.

Jim New, TMCC’s dean of applied industrial technology, said, “Obviously the most important thing is to have the workforce in place. We regularly hear that we just don’t have the entry level workforce in the community to support the needs of the industries that want to move here. Just recently, I heard this from a company in the food manufacturers industry.”

At least Truckee Meadows Community College (TMCC) and UNR have been developing programs to educate future logistics industry workers (although UNR's program is now on the chopping block, so progress there may not last long). And while that's a start, we clearly need more. We need more education, and we need better transportation infrastructure.

New said, “Whenever you look at any system, there’s always room for improvement and given the impact of the recession on the state, we’ve certainly slowed down on infrastructure upgrades but I don’t think we’ve truly lost ground like the report represented it.

“We’ve probably held steady and I would hope that as the economy recovers, we turn to improving the infrastructure, which increases jobs and improves infrastructure for all industries. We need to be able to attract more air service to the community and that in turn will attract more support business. And we need a road system that can handle increased traffic and we need support for the rail system.”

Actually, we have lost ground. Contrary to what the folks interviewed by the RGJ want to admit, the state overall doesn't have enough of the infrastructure necessary to become a complete logistics powerhouse. Again, Northern Nevada hasn't felt it quite as much. They can thank the late Bill Raggio for that.

But come here to Southern Nevada, and it's painfully obvious that we've fallen far behind. Our roads are inadequate, and so are our educational offerings. And this brings us back to what we discussed in January.

What makes this even worse is that over many years and many legislative sessions, "the powers that be" in this state have mostly looked the other way despite all the growing evidence pointing to these serious problems. "The Great 2000s Real Estate Bubble" was always doomed to burst, but hardly anyone in Carson City wanted to talk about how to get past it until it was too late. Of course, they probably didn't want to talk about it because the bulk of the state's budget was built upon the bubble, and that everything from fire stations in Tonopah to community centers in Eureka to freeway projects in and around Reno depended on tourist dollars from the Las Vegas Strip. And even as the state had been able to fund some public infrastructure in Central and Northern Nevada thanks to "bubble" money from the last decade, Clark County still lacks sufficient higher ed opportunities at UNLV, sufficient health care, and plenty other areas of infrastructure that are critical to a successful community. Strangely enough, money from the primary economic engine of Nevada (Clark County) hasn't been used to properly maintain that engine. And because that engine has been neglected, the entire vehicle (Nevada) is in trouble.

And this brings us back to our #1 problem. As long as we fail to invest in our infrastructure, we can't really fix our economic woes. Even though Northern Nevada has gotten by with a little more "help from friends", Southern Nevada has been bled to dry because our state's "leaders" have refused to let us break free from our overdependence on tourism and artificial "growth".

But as long as we continue to starve public education, shortchange transportation, and fail to invest in the rest of our public infrastructure, we'll never have the economy we need for future survival. It's bad enough that the future of UNR's logistics program is endangered while TNCC must beg for the private sector to bail out its program. It's even worse that we have nothing of this sort in Clark County. And if we don't fix this soon, we'll all suffer the consequences. And that won't be pretty.

Lights, Camera... Action?

Every so often, we hear the usual talk about Nevada's need for economic diversification. And then, we see... Nothing. But is change finally on the horizon? Local filmmakers hope so.

Although the neon and casinos of Las Vegas have long been featured in movies, too often film crews only spend a few days in the city before leaving the state to finish the filming and production elsewhere, Ramirez said.

“They’ll come here just to get the lights and the stuff they don’t want to fake, then they’ll go back to New Mexico,” he said.

Silver State is run by [Chris] Ramirez and Mark Balint, both film industry veterans, out of an office at Emergency Arts downtown, which they share with Ramirez’s dog Abby. The company employs two other full-time staff members and says it can assemble as many as 100 freelance crew members for shoots.

Ramirez and Balint are fierce advocates for bringing more of the film industry to Las Vegas. They say the city offers a versatile environment — including suburbs, mountains, desert and urban neighborhoods — in which to shoot movies, commercials or television series and that its proximity to Southern California gives it an advantage over other states trying to woo the film industry.

“Nevada has a surprising amount of looks between northern Nevada and Las Vegas,” Ramirez said. “You can fake a lot of different areas. For a movie we did years ago, I used Sunset Park for Connecticut.”

But luring more film production to Nevada likely will require the state to offer some sort of incentives, Balint said, similar to tax credits offered to the industry in 44 other states.

“If we were able to narrow that (incentive) gap, we’d get a lot more production here,” Balint, Silver State’s head of production, said.

And I can see where they're coming from. My neighborhood can probably fill in for some idyllic California suburb. Town Square can probably fill in for... Well, a real town square. The Henderson Pavilion can probably fill in for some other famous concert venue.

And then, of course, we have "The Real Deal". Instead of film crews using a California, New Mexico, or Canadian film lot fill in for our Fabulous Las Vegas Strip, they can actually film there! And the same goes for Downtown Vegas, Red Rock Canyon, Valley of Fire, Hoover Dam, and more.

So why aren't more movies made in Nevada? And why especially aren't more movies made in Southern Nevada, which has already become "Little Hollywood" as celebrities party here, do concerts here, and increasingly lure more tourists here?

It's complicated. For starters, there was legislation last session to expand tax credits for local film production. That bill died in committee.

Of course, it also doesn't help that our state never really seems to take economic diversification seriously, especially when it comes to Clark County. Think of all the opportunities we could actually pursue... If only we invest in the public infrastructure necessary to attract stable businesses and grow an educated workforce. The opportunities are always here, but when will we ever chase them?

At least with the film industry, we already have most of the infrastructure they're looking for. They're just looking for more tax credits, and it looks like a deal can be made. You know, it will be nice for Nevada to be known for more than just celebrities' naughty behavior. Maybe, we can actually become famous for the right reasons.

Can Reno Be "The Next Silicon Valley"? (& Can Las Vegas?)

Yesterday, KRNV News 4 asked.

“The number one choice of why we're in Northern Nevada is quality of life,” says co-founder of Noble Studios, Season Lopiccolo.

For the diverse group of tech-savvy professionals at Noble Studios, Reno has something for everyone.

“Some snowboard, some like to dress up and pretend to be someone else, we have musicians, people with their own bands, all different walks of life,” says Lopiccolo.

Downtown Reno is in the midst of an image makeover, shifting from a place known for its bright lights and casinos to a world-renowned high tech hub.
And the supportive and entrepreneurial friendly environment within the biggest little city is making a big difference.

“One of the main reasons why we moved to Northern Nevada is that a handshake means something here,” says Lopiccolo.

I'll do my best to answer.

Is it possible? Sure. Is it probable? Perhaps when we get serious about investing in public infrastructure.

But then again, at least Reno has public infrastructure. Las Vegas doesn't have much of any left, so it's much more difficult to work on diversifying Southern Nevada's economy. Tony Hsieh is trying to do the same thing in Downtown Las Vegas. But if no one could even step up to save the Nevada Cancer Institute (which was ultimately gobbled up by a CALIFORNIA college), how can we really grow our own tech sector? As long as we fail to properly invest in our future, our economy will continue to suck.

At least Northern Nevada has UNR...



And to their credit, folks at UNR have been doing a great job in partnering with the greater communities around the Reno-Carson metropolitan area to work on economic diversification. This at least partially explains why Northern Nevada's economy hasn't been as devastated by continuing weakness in the gaming & tourism sector as Southern Nevada was when "The Great Recession" first hit.

However, the same set of data also shows that continuing gaming weakness IS harming economic recovery up north. Not even Reno is immune from it. And as we continue to see expansion of tribal casinos in California and online gaming worldwide, Northern Nevada will need to continue working on diversification to build a brighter future that isn't just based on fickle gamblers.

And again, we in Southern Nevada can't depend on fickle gamblers for our future, either. We also have to face the reality staring us down as Macau continues to grow, online gaming goes live, and new casino projects are being proposed everywhere from South Florida to Baja California (Mexico). While gaming will likely always be in our blood, there's no reason why we shouldn't look beyond physical casinos to start attracting new gaming technology companies, online gaming innovators, as well as infrastructure support and consulting services.

But as long as our schools suck and as long as the rest of our public infrastructure continues to lag, Southern Nevada will continue to suffer our addiction to the extreme highs and extreme lows of "the bubble based economy". I'm sure I sound like a broken record sometimes, but I nonetheless feel the need to continue talking about this until we finally see some real action and real solutions. We really do have the potential to bring more high tech jobs into this state, especially in sectors like gaming and renewable energy where we have natural strength, but we'll never realize that potential if we don't invest in our "human capital".

Reno is already seeing some success in bringing in new high tech jobs. They just need to finish the job in diversifying the economy up there. And Las Vegas still has plenty of catching up to do in that department. And ultimately, both ends of the state need more investment in public education to ultimately be successful.

Las Vegas (Ward 2) Surprise?

Remember that special election coming up? Come on, you know which one I'm talking about! Las Vegas is having another special election for city council, this time in Ward 2 because of Steve Wolfson's appointment as Clark County District Attorney. And already, the fireworks are being launched. I guess because this is such a short campaign, the explosives are really stunning.

Earlier this week, Ric Truesdell launched this TV ad (!!!) attacking Bob Beers.



Earlier this week, Jon Ralston grilled him on it.

(Go to 9:00 on Tuesday's "Face to Face" show to get to Truesdell's interview.)

Yesterday, the Realtors' Association released a shocking new Ward 2 poll that showed "Undecided" leading the pack with 30%, and Bob Beers leading all the real candidates with 24%. Now we can see why Truesdell is hitting him hard.

However, there was another surprise in that poll. Ric Truesdell was at 15%, but right behind him was Kristine Kuzemka with 13%! Can she be "the dark horse candidate" that overtakes Beers and Truesdell if those two go deep into a mud wrestling match as early voting begins today?

Last night, Ralston talked to Kristine Kuzemka.

(Her interview starts at 8:32.)



And right after doing "Face to Face" with Ralston, Kuzemka went face to face with Nevada Stonewall right after the other big fireworks event with John Lee.



And she really seems to be surprising pundits by taking a different tack to city issues. So far, all the Republican/G-O-TEA candidates have been bashing the recent Downtown Las Vegas redevelopment projects and talking endlessly about "cuts, Cuts, CUTS!!!!!" like they're Paul Ryan. Kristine Kuzemka, on the other hand, is talking about bringing new revenue to the city by looking at new opportunities and bringing in new businesses. She was on KNPR's "State of Nevada" Tuesday, and she explained how the abundance of affordable housing can be used as an opportunity to bring in high-tech businesses and make a real effort to diversify the local economy.

We'll have to see how voters react in this final week to both Kristine Kuzemka's different positive message and the budding negative crap fest between Ric Truesdell and Bob Beers. Perhaps this is a glimmer of hope that Las Vegas voters are getting sick and tired of the same old "GOOD ol' boy" next-in-line kind of politics as well as the same old "tea party" games of blowing up government and leaving locals helpless? Let's see if Las Vegas Ward 2 is ready to show us a surprise.

Recovery Is Here? The Strip Feels It, But What About the North?

Nevada’s Department of Employment, Training and Rehabilitation just gave us some (mostly) welcome news to start the week. Our state's unemployment rate fell from 13% in December to 12.7% this past January. Thanks to recent improvement in gaming and tourism on the Las Vegas Strip, those sectors are adding jobs again. However, not everyone is experiencing improvement.

Nevada’s jobless rate fell from a revised 13 percent in December to 12.7 percent in January, down
from 13.8 percent a year ago and a peak of 14 percent in October 2010. The number of
unemployed Nevadans remained relatively flat at 174,700, but is down 16,300 from the same
month last year.

“Employers added a seasonally adjusted 1,800 payroll jobs. It marks the 12th time in the past 13
months that employment has grown on a year-over-year basis,” said Bill Anderson, chief
economist for Nevada’s Department of Employment, Training and Rehabilitation
(DETR). “Nevada’s labor markets continued on a path of moderate improvement in January, but
Nevada’s unemployment rate is 4.4 percentage points higher than the nation’s 8.3 percent.”

Changes in the unemployment rates in the State’s urban areas were mixed in January. In Las
Vegas, the unemployment rate declined from 13.3 percent in December to 13.1. Over-the-year, the
rate is down by 1.3 percentage points. In the State’s northern metro areas, the unemployment rate
increased by six-tenths to 13.0 percent in the Reno-Sparks area and by seven-tenths to 13.5 percent in Carson City. Reno’s unemployment rate is down by 1.2 percentage points from the previous year and Carson City’s is down by one percentage point. The unemployment rate in the Elko area increased from 6.4 percent to 7.3 in January and is down three-tenths from the previous year.

Again, this largely has to do with gaming and tourism. Las Vegas has been recovering there, but the gaming sector has been much shakier in the Reno-Tahoe market. We've been seeing those signs, but now that picture is looking clearer. And it's other reminder that gaming alone can't save us.

This comes back to what we discussed in January about our need to realize Nevada's economy can no longer afford to be a "one trick pony". During the worst of the recession, Clark County was taking the brunt of it because we were most susceptible to the real estate bubble bursting, along with global financial crises drying up tourists' disposable income. But even as economic recovery has brought many of these tourists (and some of their disposable income) back to Las Vegas, Reno continues to suffer as newer gaming destinations (like California's tribal casinos) are eating into a tourist market that used to be almost exclusively Northern Nevada's to tap.

If Governor Sandoval and state business leaders are serious about adding 50,000 jobs in this state in 2012, they have to realize that Nevada can't succeed in that by continuing to be a "one trick pony". Whether it's global turmoil affecting tourism to Las Vegas or new regional competition hurting tourism to Reno or online gaming posing a new threat to everyone, there will always be something that could harm our gaming industry. That's why it no longer makes sense to put all our proverbial eggs into that one basket.

Why Do We Need Tax Reform?

Yesterday, we kicked off "Tax Week" here at Nevada Progressive with a look at the intersection of our past and our future. This morning, we'll take a closer look at why tax reform is so badly needed here in Nevada.

Yesterday, I had to book a room at the Silver Legacy in Downtown Reno for a meeting I have to attend early next month.



Strangely enough, after I booked I found this RGJ article noting Silver Legacy's troubles in paying off the mortgage. This seems so awkward for such a big, flashy casino... And it must be painful for those in Reno who had high hopes for Silver Legacy and what it would do for Downtown Reno.

When it opened in July 1995, the Silver Legacy Resort Casino was going to be Reno’s chance to revamp a gaming market that had not seen a major new property open in 17 years.

The Silver Legacy was the result of a partnership between the family-owned Eldorado Hotel & Casino and Circus Circus Enterprises run by Don Carano and CEO Clyde Turner respectively. [...]

And for awhile, the plan worked. For example, the Reno-Sparks gaming market pulled in $834 million in 1995 and by 2000 that revenue grew to nearly $1 billion, according to UNLV gaming statistics.

The idea behind the Silver Legacy was to create a “downtown synergy,” said Guy Rocha, Nevada’s former state archivist. It featured sky-walks connecting the Eldorado and the Circus Circus as well as dome that would house a 127-foot mining rig as the Silver Legacy’s center piece.

“And it really moved a lot of the casino focus to the north side of the railroad tracks and the north side of Commercial Row,” Rocha said. “It really changed the downtown focus a lot. And I think they did for a period of time, and perhaps still do, but the landscape has changed with gambling.”

And then, everything changed. And yes, we again have California to thank (or blame) for it.



California voters approved Proposition 5 in 1998 and gave the green light to tribal casinos. But after the California Supreme Court overturned Prop 5 as unconstitutional, then Governor Gray Davis (D) and several Native American tribes went back to the ballot in 2000 with a constitutional amendment, Prop 1A. But once Prop 1A passed with 65% of the vote in March 2000, tribal casinos were finally approved for good. And ever since then, California gaming has increasingly become a serious threat to Nevada gaming interests. Northern Nevada especially felt the brunt of competition from Sacramento and San Francisco area tribal casinos as fewer Northern California gamblers were making the drive through the Sierras to Reno.



And it's not just California that's posed a threat to Nevada casinos. Right now, it looks like Las Vegas is faring better. Air traffic at McCarran continues to improve, and key Strip player MGM Resorts has narrowed its losses and found firmer financial footing. However, look at the details and see where MGM is faring best. And look at what's landed both Wynn Resorts and Las Vegas Sands into a giant tub of legal hot water. Macau is now the largest gaming market in the world, and Las Vegas will have to get used to growing competition from abroad... And perhaps from the internet as well.

So why am I bringing up everything from a Downtown Reno casino near foreclosure to Macau to online poker? Simple. These stories should all be a wake-up call to Nevada. We can no longer rely only on casino revenue to survive.

This really shouldn't be news. Two years ago, we were being warned. And late last month, UNLV's Robert Lang was trying to remind us again of what needs to be done to fix Nevada's (and especially Southern Nevada's) failing infrastructure, diversify our economy, and allow for a healthier and more balanced economy to grow.

However, this doesn't come cheap. Our colleges badly need investment. So do K-12 public schools. So do our roads and mass transit operations. And so does our health care system. And we simply can't do this without new revenue.

As it is now, Nevada is dangerously over-reliant upon casinos and the gaming industry. During "the boom years", it may have been easy to dismiss this as silly "negative nelly" talk. But now that we're facing chronic budget woes and inadequate public infrastructure that hasn't kept up with population growth for some time, we can no longer ignore the obvious.

So this is why we're embarking on "Tax Week" here at Nevada Progressive. I'd like to do my part to help foster discussion of what we must do to secure a better future for Nevada, so expect multiple ideas and perspectives on how best to fix Nevada's broken tax system and fill those pesky budget holes for good.

So What Do We Have?

We have some big, existential questions to answer. Last year, the Nevada Cancer Institute filed for bankruptcy, laid off half its staff, and faced huge financial hurdles going forward. And now, it's confirmed that UCSD will buy the Institute for $18 million. Yes, you read me right. The University of CALIFORNIA San Diego Health System will take over the Nevada Cancer Institute.

UC Regent Charlene Zettel said all UC health systems need to look for ways to increase their patient base and optimize resources to stay competitive. She said the UC San Diego purchase accomplishes that.

“Patients coming from Nevada would mean better utilization of the state-of-the-art facility we have at UCSD Moores Cancer Center,” Zettel said. “It also would be a boost for the San Diego economy because patients and families would be staying here. Most importantly, though, patients would get excellent care from some of the best doctors in California.”

Dr. Thomas McAfee, interim chief executive for the UC San Diego Health System, said buying the 142,000-square-foot, four-story building and its medical practice fits into the long-term growth plan. By broadening its circle of patients, the university can expand its research and clinical trials and boost its education programs, he said.

Certainly, this is good news for cancer patients that rely on the Institute for crucial treatment, and there may be some benefits down the road if UCSD is interested in continuing, or possibly even expanding, research and treatment programs here in Nevada. But still, this has to be a major blow to our civic pride. I mean, come on, we couldn't even save our own Cancer Institute? Even if UCSD continues some sort of research and treatment programs here, the primary mission will be to funnel more patients to UCSD's Moores Cancer Center in La Jolla.

But then again, we probably shouldn't be surprised. After all, listen to Nevada's own "home grown Presidential Candidate".



Does art imitate life, or does life imitate art?

We can keep laughing off our failure to invest in our future, or we can finally change it. Why couldn't UNR step in to save the Nevada Cancer Institute? Why do patients in need of procedures like bone marrow transplants have to travel out of state for treatment? When will Nevada be known for more than just big casinos, legal prostitution, and an addiction to the "growth begets growth, and growth pays for growth" idea that's now failing us?

We can't keep expecting casinos and tourism to prop us up. As we've had to learn the hard way, tourists don't spend as much on vacations during times of economic turmoil. You know, two weeks of tech geeks and porn stars do not make a complete and balanced economy. Yes, we obviously still need and appreciate tourism, but we also need to diversify and build the kind of infrastructure that will allow for a healthier economy to flourish here in Nevada.

I guess it's good that the Nevada Cancer Institute will be able to continue as something here in the future, but it's nonetheless saddening that Nevada couldn't even save this crucial piece of its own medical infrastructure.

First Thoughts on Today's Town Hall

Yes, I was there today. And yes, I even testified... But I will get to that later.

Right now, I want to share the stories I heard at today's budget hearings. While there were rallies and TV cameras all over the place early on outside, there was compelling testimony happening throughout the day inside.

Jim Morrow, a professor at UNLV whose parents also served Nevada as teachers, reminded us all that "we fund what we value, we cut what we don't". He shared with us what he's seen on campus in terms of students not knowing if they can continue to afford school, and whether he can continue to access the resources he needs to teach. And he reminded us that we students are the future of this state. With no higher education, Nevada is screwed. For good.

Brandon Fraleigh, of Nevada Youth Coalition, wanted to let us all know that "there are kids who care about our education". He told the legislators his heart-wrenching story of his mother being disabled, his sisters dropping out of school after giving up hope, having to skip meals often due to inadequate food stamp aid, the bus he uses being constantly congested and slow, and the teachers at school constantly feeling frustrated due to their own workplace woes. All of this would be more than enough for others to just give up, but Brandon decided his education was far too important to give up because of his own personal difficulties. But yet again, his future is now being threatened... But this time, it may be The State of Nevada threatening his future if The Legislature agrees to Brian Sandoval's budget.

Brian Boothe is a middle school teacher and family man doing his part to educate our kids... Even as he's underpaid and underwater on his Northwest house. He's determined to keep teaching despite his family's hardships, but he warned the legislators that he won't be able to do this forever... And that Nevada only stands to lose even more educated professionals, and our hope for a better economy along with them, if we keep neglecting our schools. "We must stop cutting our future." He reminded us that even Brian Sandoval's #1 hero, Ronald Reagan, recognized he could not slash the schools to death as Governor of California, so he pushed for a, GASP!!!, TAX INCREASE!!!! in order to keep California's world class institutes of higher learning easily accessible and affordable to all residents. So why can't Sandoval follow Reagan's example?

Believe it or not, these were just a few of many compelling real life stories told today at The Grant Sawyer Building. Tomorrow, I will be sharing even more stories... Including my own. Stay tuned.

New Year, New Start, New Governor... Really?

So Brian Sandoval has taken his oath. A new day has come?

"I think there is a lot of hope with Brian Sandoval," said Fred Lokken, a political science professor at Truckee Meadows Community College in Reno. "Stylistically, we have already seen dramatic differences from the Gibbons administration. I feel Sandoval has put together a good Cabinet and has done it quickly. And unlike Gibbons, they will work and stay with him for a period of time and not create the instability that Gibbons had in his administration."

Or has it really? If we're to believe the donor list for Sandoval's inauguration celebrations, perhaps not.

He was recruited to run for governor by two of the state’s leading business lobbyists and was employed by one of Nevada’s largest lobbying firms.

A glance at the list of corporate sponsors of Sandoval’s inaugural celebration reflects those ties and includes companies and interests with some of the thorniest issues before the Legislature next year. They have spent a considerable amount of money on gaining access to political decision-makers.

Barrick Gold, for example, is at the top of the list of $25,000 Platinum sponsors on the inauguration announcements. The mining industry is a top target for those who are fighting for more taxes to better fund state services. [...]

In addition to Barrick, MGM Resorts International, Wynn Las Vegas and the Retailers Association have contributed $25,000.

Donors at the $10,000 and $5,000 level include his employer, the Jones Vargas law firm, Pfizer, United Health and CVS.

So meet the new boss, same as the old boss? See, I wasn't really far off after all. We are continually confronted with the brutal reality of the changes we must make to survive the future.

In November, the Brookings Institution and London School of Economics released a report saying that Las Vegas’ economic performance ranked fifth-worst among 150 metropolitan areas around the world, and prospects for a rapid recovery are dim with its dependence on domestic tourism and construction.

In December, the Lied Institute for Real Estate Studies published a white paper that said what Nevada needs to be successful at diversification is to place greater priority on public schools, colleges and universities. [...]

The latest report on the Las Vegas economy shows the need for diversification.

In its Mountain Monitor that measures the region’s economic performance, Brookings said Las Vegas ranked second to last among the nation’s 100 largest metropolitan areas through the third quarter. The index measures changes in employment, unemployment, gross metro product and house prices from before the recession to the present. Only gross metro product, up by 0.1 percent, increased, the report said.

Economic data from the third quarter show Las Vegas is losing ground, but at a slackening pace on almost every indicator, the report said.

“The fact that other metros with different economic bases and stronger, more resilient economic engines have been able to pull themselves out of recession and into recovery underscores the need for a fundamental reflection on the nature and prospects of Southern Nevada’s current economic base,” the report said. “Again, reaching, let alone surpassing its pre-recession size will require Las Vegas’ economy to first end its slide and second post exceptional growth rates in the years ahead. But where will the growth come from? This growth can likely only be powered by a substantially retooled economic engine, one fueled much more than the last economy ever was, by human capital, innovation and exports.”

Cheese louise, when did my name become Cassandra? (Oh please, oh please, I do NOT want to see the destruction of Las Vegas Troy!)

And just what will it take to get folks in Carson City to realize we really will be heading towards doom and destruction if we allow our infrastructure, everything from our schools to our transportation to our parks, to continue to be cannabalized, just so a few craven politicians can fulfill their "no new taxes" lies "promises" and jump to higher office? When will the madness stop?

Even Sandoval's staunchest allies, such as longtime state Sen. Bill Raggio, R-Reno, are wary of Sandoval's no-new-taxes stance. It was the same stance Gibbons of Reno took.

Gibbons was forced to break it on occasion, including the time when he put revenue from a proposed hotel-room tax hike into Nevada's biennium budget.

Raggio said Sandoval has the potential to become a great governor, adding: "I have heard what he said. I have heard what a lot of candidates have said, and my point is that it is easy to say 'no taxes, no taxes, no taxes.' But on the other hand, you have got an obligation to provide for essential services, and it is not the answer to push them over to local government and let them do it because that money will also come from taxes. So all you are doing is shifting the liability over."

When even Bill Raggio states the obvious, it's well past time to pay attention! But will Sandoval? Or will he try some "third way" out like "Home Rule" (aka passing the buck for government from the state onto the counties, primarily Clark and Washoe)? Or will he just let The Legislature do all the "dirty work" for him in piecing together yet another back room deal "compromise" that depends on "quick fixes" not slash essential services as much as originally threatened?

Whatever the case, Scott Dickensheets was certainly onto something this morning when he asked just how "new" our new Governor's "ideas" really are.

And no, I don't enjoy "bashing Brian". I'm not out to "settle scores", pass along gossip, or be bitchy. I keep coming back to this because I don't see how the failed "quick fixes" of the past can work for us again. We have to change course, and frankly the sooner we do the better we'll fare.

I don't want to give up on Nevada. In fact, I refuse to give up on Nevada. The ball is now in Brian Sandoval's court. Is he too afraid to make the slam dunk we all need? And if he is, will someone(s) else step up in his absence?

10 of '10: Are We There Yet?

This week, I'm introducing 10 of '10, aka the ten most memorable Nevada stories covered here in 2010. Haven't we been through a lot this year?

And without a doubt, one of the biggest ongoing stories of 2010 was our brutal recession and whatever signs emerged of potential recovery. It seems the worst is finally over, but that's cold comfort to those here in Nevada who still can't find jobs.

Back in January, there was our first sign of hope when Goldman Sachs turned bullish on MGM Resorts as Vegas visitation numbers started rising again.

So is everything looking up from here? Apparently.

But is all the bad news over yet? Not so fast. Room rates are still hovering under $93 per night, and total spending is still down.

But at the very least, more signs are finally appearing and telling us that the worst is over and recovery is arriving. This is the third month in a row with year-over-year gains in tourist volume, and this is the first time since 2007 that Nevada casino winnings have actually seen year-over-year gains. Also remember that this is for November 2009... Before CityCenter opened!

And now with Wall Street giant Goldman Sachs betting on MGM Mirage's and Las Vegas' overall success, it's no longer looking so "crazy" to invest in Southern Nevada's future.

But still, we've had to deal with the changing dynamics of this town. In March, I wrote about the challenges posed by casinos investing more in emerging markets and less here in Nevada.

It's the law of diminishing marginal returns, plain and simple. As the 1990s Strip construction boom came to a close and the 2000s "luxury megaresort craze" began, Las Vegas began to reach the point of saturation with high-end megaresort casinos. The law of diminishing marginal returns began to take hold as the potential for profit decreased as the number of megaresorts vying for tourist dollars continued to increase.

This is why the Las Vegas of 2010 is a whole new ball game. We're no longer that tiny outlaw outpost in The High Mojave, but rather a maturing resort destination that already attracts over 37 million visitors annually. And while there are still some possibilities to expand that tourist pool, we don't have as much growth potential in gaming these days, like we did in 1950 or 1990. [...]

Now contrast this to newer markets, like Florida and Pennsylvania domestically and Macau globally. Pennsylvania and Macau are nowhere near full saturation yet, and Florida is a potential gold mine with already desirable tourist destinations that haven't yet been tapped by casinos. Now we can see why all the big casino companies are rushing to build abroad as they only agree to minor spruce-ups at their respective Las Vegas home bases.

So what does this mean? No, it's not the end of the world! Las Vegas will go on, albeit now as a more mature gaming destination rather than some place with unrealistic "limitless" growth potential.

And two days later, I wrote the rant I just can't stop using.

[... T]he casinos can no longer be counted upon as a "free ride". We can't just expect new casino construction to prop up demand for construction jobs, which props up demand for new housing, which props up demand for housing construction, which props up the rest of Southern Nevada's economy. We may have lucked out in seeing this model work from 1989 to 2007, but all it really did was hide the weaknesses in this shaky economic model that ended up being exposed when "The Great Recession" hit and all the artificial demand for new casinos, new homes, new whatever fell like a row of dominoes. [...]

Yes, there are signs of hope here. We're no longer seeing the mountain of foreclosures that seemed so mind-numbingly painful a year ago. We're no longer seeing the unemployment rate rocketing up to dangerous new highs, even though it's bad enough that it's still hovering around an already too high 13.8%. We are starting to see a return of economic growth, however so slight and lagging behind the rest of the country it is.

But again, I have to point out that we are lagging behind. We're especially lagging behind metro areas that have better PreK-16 education systems and more stable employment sources. Salt Lake City and Ogden, Utah, both have GMP (gross metro product) growth rates exceeding the national average and unemployment below the national average. Same goes for Denver, Boulder, and Colorado Springs, Colorado. So why is this? All of these areas boast a highly educated workforce employed in stable sectors like high-tech and biotech, and none were as dependent on the housing bubble and artificial "construction for the sake of construction" as Southwest areas, like Las Vegas and Phoenix (which is also lagging behind in economic growth).

So again and again, we come back to this dilemma. As long as our education system is broken and as long as we continue to make ourselves overdependent on the casinos and casino-fueled development, Las Vegas will continue to suffer under this radical boom and bust cycle that lives and dies on discretionary consumer spending. Sorry, but this is not how a major metropolitan area with 2 million residents and a state with over 2.7 million residents can survive!

So it all comes back to this. Will Nevada remember the lessons learned the hard way during The Great Recession? I have a feeling we have no other choice. Gaming revenue likely won't return to pre-recession levels until 2014. And moving forward, there's no more chance of "limitless" "growth for the sake of growth", as there just isn't much room left for The Strip to grow and competition can now be found almost everywhere.

Looking forward to 2011 and beyond, Nevada needs to look to more stable job sectors to find the stable economy we've always been looking for.

Again, I Told You So... So When Will Someone Tell Brian?

Thought my rant yesterday was "crazy talk"? Read this and weep.

Before the recession, in measurements analyzing 1993 through 2007, Las Vegas ranked No. 14 in the world among 150 metropolitan areas studied by the Brookings Institution and London School of Economics.

Las Vegas fell to 128th in the rankings during the recession in 2008 and 2009, and since the recovery has begun, its ranking has fallen to 146th. That’s better than only Dublin, Ireland (150); Dubai (149); Barcelona, Spain (148); and Thessaloniki, Greece (147).

The report said the patchy recovery that took hold in most U.S. cities in 2009 and 2010 didn’t happen in Las Vegas. The city’s income levels declined 1.2 percent despite an increase nationally, and the employment rate dipped 3 percent, much greater than the national decline of 0.7 percent.

The report also cited Las Vegas’ foreclosure problem with the second highest share of bank-owned homes in the country and more than two-thirds of residential mortgage holders owing more than their homes are worth.

OK, so our economy still sucks. What else is new? Well, we now know we're barely performing better than Dubai, Dublin, and Barcelona, three cities in debt wrecked countries... Countries that engaged in much of the same debt and speculation fueled "growth" that we did, by the way.

So how do we get out of this hot mess? Come on, this should sound familiar.

“The economy that Las Vegas had before the recession is not a recipe for growth in the new economy,” [Alan Berube, senior fellow and research director at Brookings Metropolitan Policy Program,] said. “There has been talk about the need to diversify and find new sources of economic growth, and that is imperative in the long run.”

The strongest growth during the recovery has taken place in more highly educated regions such as Washington, D.C.; Minneapolis; Austin, Texas; and San Francisco, Berube said. Highly educated people tend to work in industries that aren’t as affected, and if they get displaced they have an easier time shifting to a new job than someone who’s less skilled and educated, he said.

The report cited the importance of existing public and private centers of innovation such as the Solar Solutions and Advanced Clinical Training and Research centers at UNLV. Las Vegas is “out of the starting gate, but it has a lot of work to do” to take advantage of its opportunities and build from its strengths, Berube said.

The report mentioned that raising Las Vegas’ low rate of college degrees from 22 percent of adults would be crucial in helping diversify the economy.

“It’s going to be a tougher transition for your economy,” Berube said. “It’s the chicken and the egg (scenario). You need the education to build a workforce, but you have to make investments to attract those workers.”

Now isn't this what we've been talking about throughout this year? We NEED a more highly educated workforce if we want a truly sustainable and healthy economy!

Yet again, we're hit hard by reality. We can't solely rely upon "conspicuous consumption" any more. And as Americans are holding onto their money more tightly and more afraid of ramping up personal debt again, lessons from The Great Recession that aren't being forgotten just yet, Nevada can no longer rely upon a whole bunch of middle class tourists taking additional mortgages on their homes and running up their credit card debt just to "live it up in Vegas" for a few days. And as Europe is still jittery over the Greek and Irish meltdowns and Asia is nervous about the recent Korean flare up, we also can't just depend on foreign tourism to get us out of this mess.

We need a new economy. We need a more balanced economy. We need an economy that doesn't solely rely upon the casinos, and the only way we'll get there is if we fully invest in our public infrastructure, and that includes investing in our schools.

But what are we hearing out of soon-to-be-Governor Sandoval? More of the same old s--t.

Echoing Republican governors across the country, Sandoval has emerged as the state’s unlikely premier anti-tax warrior, even though his past reflects a more moderate approach to governing.

Sandoval has remained firm in the face of protests that cuts to balance the state’s $3 billion deficit in funding needed to maintain existing services will harm education, health and human services and the long-term well-being of the state.

So what does Brian Sandoval want to do? Placate his new teabagger friends by starving the state to death? Or listen to actual knowledgeable people who are urging us to finally make that down payment on diversifying our economy and creating a better Nevada?

A Discussion With State Senator Joyce Woodhouse on "Green Collar Jobs"

On Saturday my State Senator, Joyce Woodhouse (D-Henderson), took some time out of her busy weekend to head over to Silver Springs Recreation Center in Henderson (and just a short walk from my house!) to chat with us neighbors about clean energy, green collar jobs, and other Nevada issues we're concerned about.

And since you already know how hard it is for me to keep my mouth shut, you know I had some questions ready.

So I asked about renewable energy, and specifically what Nevada can do to regulate greenhouse gas emissions, similar to California's AB 32, while Congress still isn't yet working on federal climate change legislation. By curbing our greenhouse gas emissions and setting real, concrete standards for renewable energy production, we can actually encourage more growth in the renewable energy sector needed to diversify and jumpstart Nevada's economy. Senator Woodhouse responded by saying her colleagues in Carson City are considering stronger climate legislation, as California's model looks promising.

Already, we've been taking steps in this direction here in Nevada. Woodhouse discussed SB 152, the "Green Jobs Initiative" that allowed Nevada to invest federal Recovery Act (stimulus) funds in "green job" training centers, retrofitting, and actual renewable energy projects.

She also mentioned SB 358, which was also passed last year. SB 358 provides tax incentives for solar companies to hire Nevadans for the jobs, along with enabling more residential solar panels, planning more energy efficiency measures, and more.

All in all, it seems we're on the right track here in Nevada... I just think we can go further in developing our "green economy" while also diversifying our economy AND actually doing something about the climate crisis. I was glad to see Senator Woodhouse so open to doing more as well, and I hope the legislature will be serious about passing comprehensive legislation like California's AB 32 to set a real framework to tackle climate change and remake Nevada into a renewable energy powerhouse.

And speaking of our economy, we also briefly discussed the budget. Unfortunately, as of now our state is still heavily overdependent on gaming to balance the budget. That's why it was feared just a couple months ago that we'll be facing a $3.5 billion + deficit (or over half of the state's total budget!) in the 2011-2012 biennium. And while recovering Strip numbers have helped to reduce the projected deficit to about $2.5 billion, it is still a major problem our state will be facing next year.

Now Joyce Woodhouse didn't want to address "the t word", and I can understand why. We always mumble and groan and complain about taxes, even if we have no state income tax. And we always ask about supposed "government waste" that can magically be waved away, even though Nevada already has the cheapest state government per capita.

I was glad to hear the Senator talk about how our schools and health care programs can't afford any more cuts. They were already cut to the bone, and now the marrow is being sucked out of them... Especially with the schools, now that class size reduction is being cancelled and teachers are being laid off. If we really are serious about diversifying the economy, we need to better educate our kids to prepare them to be more than just cocktail servers and valet attendees.

So what can we do? Senator Woodhouse mentioned efficiency studies and stronger efficiency standards for state agencies. Maybe they will find some savings this way, but again I don't know how much more "efficient" the state can be when our government is already down to bare bones with even the marrow being sucked out from those bones.

Now one thing I was so glad to hear the Senator mention was the economic diversification issue. Again, our state is too reliant upon gaming. We can no longer afford to be a "one trick pony", and we need to find a way to survive on more than just casinos if we want Nevada to succeed. This goes back to green collar jobs and expanding our renewable energy sector. This goes back to building a stronger education system that provides the kind of workforce here that high-tech and biotech are looking for. Any long-term plan for a stable Nevada economy must include real efforts to diversify our economy, and I'm glad my State Senator is already thinking about this and working on this.

All in all, it was nice to see my State Senator drop by the 'hood and let us know what's being discussed in Carson City. And perhaps more importantly, it's nice to see she's listening to us. I know it's hard in an election year to talk about the reality of our state and what we need to do to fix our problems (hence why hardly any candidates want to talk taxes), but this is at least a real start.

No New Casinos in Vegas? This Is Nevada's Rude Awakening.

OK, so you've been hearing me talk lately about Las Vegas Sands eyeing Florida for new casino resorts as it expands Sands Behthlehem in Pennsylavania and Wynn Resorts jumps into Pennsylvania with a new Philadelphia casino. And of course, we've been hearing constantly about all of our big casino companies flocking to Macau to cash in on the Asian gambling bonanza...

So why aren't we seeing this here in Las Vegas? That's a good question, and one that today's Sun ponders. Why was Harrah's rushing to buy PHo, but not to build a new casino? Why is Wynn rushing to build the Switch Beach Club at Encore, but not move on what had been its plan to build more hotel towers on what's now the golf course?

So what makes a pool or restaurant worth opening in the midst of a recession but a new Strip resort or hotel expansion a terrible idea? It’s not that casinos, in and of themselves, are the problem. After all, Steve Wynn wants to invest $250 million in a Philadelphia casino under development. And his competitor Las Vegas Sands — which already has a Pennsylvania casino — is lobbying to build a Las Vegas-style resort in Florida. So what makes Las Vegas casino owners swear off new resorts in their hometowns for developments in other parts of the world?

The answer is the Strip’s return on investment, which is, at its most basic, what a project earns divided by its cost. This equation, which drives business decisions in any industry, best explains why developers won’t be building hotels or casino resorts in Las Vegas for years to come.

Revenue generated by major Strip operators fell up to 21 percent last year and earnings fell by up to 37 percent. Returns for new projects — especially Encore, which opened in the midst of the recession and which has a year of operations under its belt — is close to zero.

That’s a dramatic change. In the early 1990s, new projects in Las Vegas generated returns in the 20 percent range, peaking at 29 percent in 1993, according to an analysis by casino consulting firm Union Gaming Group. Returns were sliding in the teens by the year 2000, plummeting to an all-time low of 5 percent in fiscal year 2009.

New properties increased competition in Las Vegas but also helped the market by attracting first-time visitors. That trick has become harder to pull off with the limited number of visitors able to afford the Strip’s increasing number of higher-end hotels. It’s even more difficult to do in a recession.

It's the law of diminishing marginal returns, plain and simple. As the 1990s Strip construction boom came to a close and the 2000s "luxury megaresort craze" began, Las Vegas began to reach the point of saturation with high-end megaresort casinos. The law of diminishing marginal returns began to take hold as the potential for profit decreased as the number of megaresorts vying for tourist dollars continued to increase.

This is why the Las Vegas of 2010 is a whole new ball game. We're no longer that tiny outlaw outpost in The High Mojave, but rather a maturing resort destination that already attracts over 37 million visitors annually. And while there are still some possibilities to expand that tourist pool, we don't have as much growth potential in gaming these days, like we did in 1950 or 1990.

Dr. Dave Schwartz at UNLV's Center for Gaming Research has examined the numbers and does a good job at explaining what's happening. By looking at the 2000-09 casino winnings and adjusting the numbers for inflation, we see that Las Vegas casinos are actually earning less today than they were in 2000. Again, we're dealing with the law od diminishing marginal returns as casinos realize they've "maxed out" earnings potential on The Strip.

Now contrast this to newer markets, like Florida and Pennsylvania domestically and Macau globally. Pennsylvania and Macau are nowhere near full saturation yet, and Florida is a potential gold mine with already desirable tourist destinations that haven't yet been tapped by casinos. Now we can see why all the big casino companies are rushing to build abroad as they only agree to minor spruce-ups at their respective Las Vegas home bases.

So what does this mean? No, it's not the end of the world! Las Vegas will go on, albeit now as a more mature gaming destination rather than some place with unrealistic "limitless" growth potential.

And yes, this also means something that I've been hammering here for some time: We MUST diversify our economy in Southern Nevada! This recession should be our "reality check" that gaming is not the "free ride" we thought it was. We talk a whole lot about economic diversification, but we never seem to get around to doing something about it.

This needs to change. Oh yes, and guess what attracts other industries the most?

Although recent economic studies show taxes are a rising concern for business, they generally remain low on the list of priorities of a company considering relocation.

More important is the availability of skilled, educated labor, says Robert Tannenwald, economist at the Boston Fed and director of the New England Public Policy Center.

And it’s usually found in communities with quality education, including research universities.

That’s why Colorado, with a first-class research university system, has emerged as a hub for the aerospace, biosciences and renewable energy industries.

Yep, yep, yep. It's all about education. Too bad for us that we're near dead last in education funding.

Now this all goes back to what I've been saying here for months. We get what we pay for. If we don't invest in needed infrastructure like better schools, we'll continue to suffer.

Again, gaming is NOT a "free ride". We can't count on just gaming any more to save our sorry asses. We need to get serious, fix our PreK-12 school system, make our university system truly world-class (a la Colorado), and offer the kind of top-notch workforce that will mean a better and more stable future in Nevada.

So when will we stop betting the farm in the casino and start planting the seeds for that better future?