Shall the Nevada Constitution be amended to allow the investment of state money in a company, association, or corporation to assist economic development and the creation of new high-quality jobs?
Anyone who has taken the time to study Nevada’s economic situation knows that economic diversification is the key to stabilizing our financial future. It’s just not healthy for us to depend so heavily on the gaming/resort industry, especially with the changes going on in other states and on Native American lands. The state has been investing a lot of time and money in recent years on programs to convince companies, especially in the high-tech sector, to locate in Nevada. Yet, Nevada voters have twice turned down a golden opportunity to make Nevada more attractive to businesses, and put money in the state coffers at the same time. For those who missed it the first two times (1992 and 1996), here it is again, this time as Question 1 on the November ballot.
Question 1 would amend the state constitution (in Article 8, Section 9, for those who carry a copy) to permit the state legislature to make investments of public funds in corporate entities needed for economic development or diversification, and for the creation of jobs. In plain English, the passage of this ballot question will allow Nevada to do what all but five other states can do already-invest public money to assist private enterprise. It will attract new high quality businesses and industries to create new jobs and diversify the economy. It does not require a tax increase, nor does it require any investment to be made. It simply acts as an enabling provision to allow the legislature to consider options that are now prohibited.
Besides expanding Nevada’s technology business base, passage of Question 1 will create new high-quality jobs for Nevada residents and assure that students graduating from Nevada’s schools have opportunities for good jobs close to home.
The success of similar programs in other states offers convincing evidence of what could happen in Nevada, once the passage of Question 1 levels the playing field. In a recent eight-year period, Utah funded 278 companies and created 6,500 jobs by investing one dollar of state money for each $43.2 of private funds. In Maryland since 1994, the initial pool of $2.5 million has earned $43.0 million. Kansas amended its constitution in 1986 and has created over 9,300 new jobs. The current constitutional restriction places Nevada at a competitive disadvantage relative to other states that are able to offer seed money to new business and industry and to provide other sources of financing, such as public/private venture capital funds.
Not convinced yet? The National Governors’ Association recently conducted nationwide research on state initiatives to attract business. Here’s what executive director Ray Scheppach concluded: “We have found during our research this year that in order to be successful in this new economy it is critical for states to create programs that support the entrepreneurial culture. State sponsored programs that provide ready access to seed and venture capital are critical for economic development in the twenty-first century.”
So why did the state constitution disallow these types of investments in the first place? At one time it made sense, but that was in the 1860’s, when Nevada and several other Western states feared that robber barons from the railroad industry might try to take over their states. That was a long time ago, and times have certainly changed. In order to keep up with the intense competition for new industry, we need to be competitive.
The Assembly Joint Resolution that created Question 1 was passed almost unanimously by the 1995 legislature, and it has been endorsed by a coalition of private citizens, educators, business owners, and public officials. This time, the effort is being led by Nevadans for Economic Opportunity, co-chaired by Joe W. Brown of Jones and Vargas and former Congresswoman Barbara Vucanovich. When the question was brought to a statewide vote before, it failed to receive the majority needed for passage. Perhaps people feared making any change to the constitution; more likely, they just didn’t know the facts.
Nevada is already perceived as a pro-business state. Companies want to come here and take advantage of our favorable tax structure and economic climate. Maybe the obsolete clause in the constitution is our only roadblock to diversification. But as anyone who’s driven the construction-filled streets of Nevada knows, one roadblock can be reason enough to find another route. We have another chance to remove the roadblock – let’s use it.