(John Chachas) – The economic vitality of Nevada is tightly linked to the health of Nevada’s leisure and entertainment industry. In times when U.S. corporations aren’t sending people to trade shows and conferences, Nevada’s economy suffers disproportionately to the rest of the country. The ugly truth is the Silver State has made an inadequate effort to diversify its economic base, and we’re now paying the price.
A second sad fact is we have limited tools at our disposal to influence in the short term the outlook for job growth. As goes the general U.S. consumer economy, so goes Nevada.
The outlook for recovery in Nevada remains grim as America’s unemployment continues to climb toward 10.5 percent with consumer household debt topping $15 trillion — that’s up from $6 trillion just a decade ago — constraining the recovery of consumer spending which drives 70 percent of our economy.
The second largest industry in Nevada, construction, has near perfect correlation to our No. 1 industry, leisure. The Las Vegas Chamber of Commerce reports unemployment in Nevada’s construction trades approaching 50 percent — a level reminiscent of the Great Depression. Clark County’s unemployment rate in October declined not because jobs were more plentiful but rather because the denominator (the total potential employee base) shrank as people left Nevada.
Senate Majority Leader Harry Reid, D-Nev., was quick to pass out taxpayer funded kickbacks to senators from Louisiana and Nebraska to advance a personal and partisan political agenda but lacks a short or long term financial plan to help Nevada. Using tax dollars from Nevada to pay for turtle crossings in Florida and highways in Oklahoma is an abysmal way to jumpstart the moribund Nevada economy. Below are some key steps that will help stimulate the economy and get Nevada back to work:
• Growth requires investment in something other than Nevada casinos.
Diversification of Nevada’s employment base starts and ends with two questions: where else in the state can jobs be created in the near term? How can the federal government encourage private investment without resorting to more deficit-financed “stimulus”? Nevadans are self-reliant, self-starters and have grown accustomed to giving more to the federal government than we receive, however, we’ve grown weary of tax and spend stimulus programs that stifle, rather than stimulate, economic growth. The answer: Nevada’s greatest source of a potential improvement in our employment situation is for the Department of the Interior to grant a land dividend back to Nevada of what is already rightfully ours.
• The Feds should return 10 million acres to Nevada for sale to private industry.
With nearly 50 million acres in its control, the BLM alone controls nearly 70 percent of Nevada’s land. Ranchers and miners here know the Feds do very little with the land, much of which has rich economic potential. Three times in the past 20 years federal statutes have authorized the BLM to dispose of lands, but then relatively few sales actually happen. The Federal Land Transaction Facilitation Act of 2000 actually sought to reverse initiatives of the Federal Land Policy Management Act of 1976, which focused on disposing of nearly 1 million acres. The Southern Nevada Public Land Management Act of 1998 specifically focused on Clark County land sales. All these bills became law and yet little of the total federally-controlled acreage ever made it to the private sector. The federal government bureaucracy manages to kill every land initiative, and it must stop. A return of saleable lands to the Silver State followed by swift privatization and tax advantages for the buyers is a starting place for a Nevada recovery.
• Federal income and capital gains tax deferral to induce investment in privatized land.
In addition to the land dividend I would propose companion legislation pairing tax relief for buyers of such lands. Federal tax deferrals for qualified investments in job-intensive industries deployed on such lands is an easy and logical stimulus costing nothing (since no industry exists today, the Treasury is giving up nothing). There is no more successful incentive than tax advantages to encourage investment. I would propose designation of the privatized lands as Federal Tax-exempt Enterprise Zones to spur prompt investment and development. These tax abatements would remain in effect for 10 years and would begin phasing out over 60 months beginning in year 11. To ensure that Carson City doesn’t simply warehouse such lands, the land transfer would be effective only if the lands are swiftly redistributed to private ownership through competitive sales, qualified homesteading or other means. The goal has to be full and swift privatization, not simply a transfer to the State.
The selection of lands for sale has to obviously incorporate appropriate considerations for national parks, wilderness areas and military installations. But there is ample land for farmers to grow winter wheat or alfalfa and more ranchers to produce livestock, and bring those products to market on a tax advantaged basis. Mining companies should be induced to hire men and women to take minerals out of Nevada’s hills and to use the profits to increase reinvestment. For each dollar reinvested, the power of tax deferral multiplies in jobs and Gross Domestic Product. The goal is to bring entrepreneurial companies and the tax reductions can be designed accordingly to induce such investment. Millions of Nevada acres are suitable for agribusiness, for the exploitation of minerals, for commercial grade green energy, and for other industrial use where the flat and sparsely populated valleys can be a source of employment rather than sitting in an inventory overseen by a BLM officer.
The plentiful asset in all of our backyards is one tool available to begin stabilizing Nevada’s employment and economy. The near-term imperative to spur investment and risk-taking also requires thoughtful tax policy, which will in time mean even more jobs. The U.S. Treasury can thank Nevadans for reducing the burden on Washington by shrinking the amount of land the BLM has to manage. And, in due course, as profitable new enterprises emerge on these lands, the Treasury will reap federal income tax revenue.
Senator Reid is busy with his White House photo-ops, but we are going to continue to make public suggestions of how to help Nevada begin an employment recovery. Part II of this series of policy papers will be posted on my Web site shortly at www.chachasfornevada.com.
(John Chachas is a resident of Ely and New York City. He is a Republican candidate for the U.S. Senate in Nevada.)
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