Tax incentives awarded to companies to do business in Nevada during the last ten years cost the state $334.7 million in tax revenue, but generated $1.5 billion in new tax revenue and fueled an economic impact of $55 billion, according to a report from the Governor’s Office of Economic Development.
The report is the first of its kind in nine years, according to state Sen. Heidi Severs Gansert, who was Chief of Staff to Gov. Brian Sandoval in 2011, the last time the state issued such a report.
Gansert is sponsoring a bill that would require the state to report on tax abatements every three years. Additionally, the state’s Regional Development Authorities would be required to submit reports to the state every two years.
Gansert says more frequent reporting is necessary in order to align the state’s workforce development priorities with economic diversification efforts.
“A.I. (Artificial Intelligence) and remote employment look different than they did before (the pandemic)” Gansert testified Tuesday before the Senate Economic Development committee.
“If you were to look at Washoe County, they’re significantly diversified and right now experiencing an unemployment rate of 5 percent,” Gansert said, noting Clark County’s jobless rate is “significantly higher.”
The bill also requires lawmakers to determine if the state is using the right incentives to attract business.
Tax abatements allow companies to forego paying certain taxes for a specified period of time. In return, companies promise to invest in capital and jobs.
“I’m curious. I think we’re seeing an emerging body of research from folks like Pew Charitable Trust and others that are questioning whether tax incentives or abating taxes is a successful economic development tool,” Sen. Julia Ratti said, referring to a study that found “place-based programs often fail to benefit the places and people they are intended to aid.”
“Are we offering the right abatements or are we going to do the work to figure out if abatements are a tool we really need to continue to use?” Ratti asked.
Gansert responded that 70 percent of companies moving to Nevada said incentives were “an economic driver” for the decision.
The 2021 report on economic development incentives indicates companies that received abatements generated more than 14,000 jobs in the last ten years.
“We don’t want just any jobs,” Gansert said. “We want jobs that make our economy more resilient.”
