NEVADA: #8 Diversification Through Incentives
It cost Nevada at least $1.3 billion last year to lure Tesla Motors to Reno to build the world’s largest lithium-ion battery plant. The winning package it offered was far and away the largest economic incentive deal of 2014, shoving Nevada to the center of the national economic-development main stage. The expanding alternative-fuel car manufacturer says it will invest $5 billion and create 6,500 jobs. Insiders say the full-court press to attract Tesla reflects a desire among state leaders to diversify the state’s wilting economy, long associated with casinos and construction.
Hammered by the Great Recession, Nevada’s gambling and construction industries remain well below pre-2008 peaks. Business advocates say that the state is rebounding. “The Silver State
has reemerged as one of the fast-growing states in the nation,” asserts Dr. Stephen Brown, director of the Center for Business & Economic Research at the University of Nevada at Las Vegas. Brown cites strong growth across most industries since 2012. However, much of Nevada’s labor market is transitory, and large numbers of workers continue to leave the state in search of jobs.
“We believe that the Nevada economy will continue to see improvement in 2015 and 2016,” he says. “The gains in 2016 should be stronger than in 2015.” Housing construction should rise 8.3 percent this year, and 11 percent in 2016, he forecasts; gambling revenues should rise 2 percent his year, and 2.5 percent next. Nevada’s population, formerly the fastest-growing in the nation, is slated to grow this year and next by a slow-but-sustainable 2 percent. Tourism is up, too. Nevada’s tax burden ranks eighth lowest out of 50 states, and it ranks third in the Tax Foundation’s State Business Tax Climate Index. Nevada spends over $33.4 million per year on incentives.
COLORADO #11 Labor Supply Continues to Grow
Colorado employment grew 3.3 percent in 2014, led by trade, transportation and utilities, construction, financial activities and professional and business services. All sectors of the state’s economy—save the information industry—are predicted to continue growing this year. According to economist Richard Wobbekind, executive director of University of Colorado Boulder’s Business Research Division, innovation and infrastructure development are driving economic growth across the state. Meanwhile, employers are resisting wage increases.
Colorado “remains a magnet for young, college-educated adults, helping attract more technology firms to the area,” says Mark Vitner, senior economist at Wells Fargo. For example, Lockheed Martin has completed a new commercial space headquarters just outside Denver and is slated to hire 500 new employees. Panasonic Enterprise Solutions is building a new hub near Denver International Airport that will employ 300 people. Other leading job growth sectors for 2015 include the leisure and hospitality sector, which is expected to add 11,200 jobs, and the education and health services sector, which is expected to add 9,300 jobs. A state filing-fee holiday possibly helped accelerate new business registrations and renewals, up nearly 14 percent in 2014 over 2013. Initial high expectations for a legalized marijuana industry have largely been dialed back, after initial tax receipts proved underwhelming; advocates say give it time.
Efforts by the Colorado Association of Commerce and Industry to get the legislature to act on such issues as transportation funding, K-12 education testing reform and local healthcare finance were tabled due to what the association called partisanship and politicking. Colorado’s tax burden ranks 31st out of 50 states, and it ranks 20th in the Tax Foundation’s State Business Tax Climate Index. Colorado spends over $995 million per year on incentives.
UTAH #15 Continued Moderate Growth
The Utah Economic Council called 2014 “a good year” overall for Utah’s economy, and predicted “continuing moderate growth and improving economic conditions” in 2015. Utah’s job-creation rate, 3 percent in 2014, will taper off to 2.5 percent this year, according to the Utah Economic Council.
Driven by a strong technology sector, employing one out of five state workers, Utah companies hired at well above the national average, and unemployment continued to trend down, reflecting the Beehive State’s long-standing position as one of the country’s top states by employment; currently Utah boasts the nation’s second-lowest unemployment rate. Still, graduates talk about the difficulty of finding jobs, while employers declare filling jobs is problematic.
“We see the labor market continuing to improve,” says CBRE research analyst Joseph Farrell. “There is room to grow.” The ongoing expansion of Salt Lake City International Airport continues at a rate of nearly $20 million a month, pumping multiplier dollars into the economy.
In April, the American Legislative Exchange Council ranked Utah the nation’s top state based on its performance on three key variables: state gross domestic product, absolute domestic migration and non-farm payroll employment.
Living and working in Utah is not for everyone; the prominent role of the Mormon Church deters significant numbers of potential relocators. “I think church/state is an issue,” says site
selector James Renzas, principal of the RSH Group. “This is especially so for people considering relocating from places like California. They will not mesh with prevailing values.” Utah’s tax burden ranks 23rd lowest out of 50 states, and it ranks 9th in the Tax Foundation’s State Business Tax Climate Index. Utah spends over $207 million per year on incentive programs.