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July 7, 2015

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To diversify, Nevada must better educate, community leaders conclude

STINGING REPORT

Nevada’s historically stingy funding of K-12 and higher education is the foundation of a report — “Nevada: 50th in the Nation for Education” — prepared by state leaders in fields such as banking, architecture and real estate. The report says Nevada will never rise above its dependence on boom and bust cycles tied to tourism and construction if its government leaders continue to depend on low taxes — instead of top-notch schools — as their ace in the hole for attracting businesses.
John Restrepo

John Restrepo

Somer Hollingsworth

Somer Hollingsworth

The people who champion low state taxes as a way to recruit businesses to Nevada are undermining the state’s future by not advocating what businesses really need for success: better schools.

That is the conclusion reached by 40 community leaders who examined the role of education in diversifying Nevada’s economy.

If low tax rates were the key to attracting businesses, Silicon Valley-style economic clusters would be sprouting in Nevada rather than in Northern California, Seattle, Boston or North Carolina’s Research Triangle, the group said.

“Touting ourselves as a low tax state as the only reason people want to come here has proved to be a failure,” said John Restrepo, principal of Restrepo Consulting Group and a member of the study group. “If low taxes were all we needed, and we have been touting that, we wouldn’t have a 15 percent unemployment rate.”

The group’s report, “Nevada: 50th in the Nation for Education,” emanated from a round-table discussion among representatives of banking, architecture, law enforcement, education, real estate and government.

They met in August under the sponsorship of UNLV’s Lied Institute for Real Estate Studies and have published their findings. Dominant among them: Nevada won’t diversify its economy and prevent another deep recession unless education is valued in the community and more money is invested in public schools and colleges.

People and businesses leave Nevada or never move here because the educational system fails to meet their needs. The region is particularly off-putting to innovative, cutting-edge employers who seek excellent schools, the report said.

“We can no longer shortchange the state’s public schools, colleges and universities because of a lack of financial, political, social and economic will,” the report said. “To do so is shortsighted and will simply find us falling further behind Arizona, California, New Mexico, Utah and other states in the push to lure the innovative entrepreneurs, investors and workers of the coming decades. To do so will relegate Nevadans to continued cycles of boom and bust that are heavily dependent upon the uncertain fortunes of the gaming, construction and government-employment sectors.”

Somer Hollingsworth, president and CEO of the Nevada Development Authority, a nonprofit organization that recruits companies to Southern Nevada, said he agrees more money has to be invested in education to lure “the finest companies” in the long term, but said companies are moving here that pay $30 to $50 an hour and are satisfied with the state’s schools.

“The problem is we have never sold this as a business climate or put any serious money marketing that. We have sold ourselves as a resort industry,” Hollingsworth said. Improved education might help the state’s future but does nothing to help today’s economy, he said.

The study’s participants, however, said the state can’t afford to wait any longer to address educational shortcomings that place Nevada at the bottom of various national rankings.

“Low graduation rates put us at a distinct disadvantage when it comes to the development of the next generation of qualified workforce employees,” the report said. “It also fosters a reputation of failed educational achievement that makes it difficult to persuade potential employers to move here.”

Among the report’s suggestions:

• The Nevada Legislature should reform how funding is distributed to reflect Southern Nevada’s greater contribution to the state budget, and discussions must be held on tax reform.

• The state should pursue the opening of a major medical school in Southern Nevada.

• Business leaders and local chambers of commerce must argue that an investment in education is the first step to the sort of diversification that will prevent the economy from returning to a deep recession.

The report said that although Southern Nevada has talked about economic diversification for years, it was “little more than talk” until the economic collapse under the Great Recession that has seen 15 percent unemployment rates, foreclosures ravaging communities and hundreds of thousands of people struggling to pay their bills and feed their children.

With better schools, Nevada would be in a better position to recruit companies in such fields as medical services, communications, accounting, green jobs, law and financial services.

“But other regions throughout the country are chasing the same employers, and many communities are well ahead of us when it comes to their overall investment in public K-12, colleges and universities,” the report said.

Nasser Daneshvary, the Lied Institute’s director, acknowledged that diversification has been talked about for 10 to 15 years and little has resulted. He said he hopes the report is taken seriously by business and political leaders.

Restrepo said economic diversification and other white papers have been ignored or shelved by politicians and not advanced by the business community, but there’s a sea change in attitudes taking place that more has to be done to weather the next recession.

Although the existing political climate of no new taxes in a state facing a $3 billion budget deficit poses a challenge today, the report sets the stage to deal with the issue when the economy improves, Restrepo said.

“It takes patience and a huge amount of investment,” Restrepo said. “If we don’t do that, we have to accept that we are going to ride the business cycle and be vulnerable to discretionary spending.”

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