NLV Proves Government Spending Doesn’t Stimulate The Economy

(Michael Chamberlain/Nevada Business Coalition) – Since the onset of the recession, we have heard cries that we must increase government spending to “stimulate” the economy. Listening to those on the left, the cure to the recession lies in boosting government spending and they’re especially fond of spending on infrastructure projects.

Furthermore, they say, the road to a strong recovery and a resilient economy is paved with higher taxes and strong unions, especially public employee unions. But one need not look beyond the Las Vegas Valley for a case study in the disastrous results of such an approach.

If these policies were the way to stimulate the economy, the city of North Las Vegas would have led the rest of the area in emerging from the recession and would by now be an economic powerhouse. But, rather than driving Clark County to recovery, North Las Vegas is virtually bankrupt and the state of Nevada is considering taking over its financial management.

CNLV has just about everything the left would like to convince us is necessary to drive an economy out of recession. The city has spent massive amounts of money on infrastructure projects, has powerful public employee unions and some of the highest taxes of any locality in the area. Despite the powerful unions, the city has been forced to slash jobs and the high taxes have not produced sufficient revenues.

Since the recession began, the city of about 220,000 has spent hundreds of millions of dollars on infrastructure projects. Among them were a new city hall, at a cost of $130 million, and a $300 million wastewater treatment facility. There were also a variety of roadwork, such as the 5th Street Interchange revamping the area where Las Vegas Boulevard and Main Street merge, and smaller building projects, including a $20 million recreation center the city has leased to the YMCA because it can’t afford to operate it.

None of these were intended to serve as economic stimulus. They were conceived and planned before the onset of the recession when CNLV was booming – it was one of the fastest-growing cities in the nation – and its coffers were overflowing. However, with construction commencing after the downturn was underway, the timing of these projects made them precisely the type of “shovel-ready” jobs the left believes are the key to spurring recovery.

Yet these projects did not drive a recovery. Instead, the City is on the brink of bankruptcy and in the midst of a financial crisis so severe it has led the state of Nevada to consider the drastic step of taking over.

As if more proof were needed, the combination of infrastructure spending, powerful unions and high taxes has not led the city of North Las Vegas out of the doldrums. CNLV has all the policies the left believes will stimulate a strong recovery and sustain a sturdy economy. But, as with much of the left’s agenda, the real world results are quite different.

(Michael Chamberlain is Executive Director of Nevada Business Coalition.)