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the economy economic development costs state $30,000 per job in taxes By Anjeanette Damon staff writer Nevada officials approved $87.6 million in tax incentives to create nearly 2,900 jobs in the past two years, according to data obtained by the Las Vegas Sun, a sister publication of VEGAS INC. That's about $30,000 in forgone tax revenue per job. Some state economic development officials argue that figure shouldn't be looked at as a cost to taxpayers. Instead, they say, it's a $30,000 per job enticement — a temporary cessation in tax collection — that brings with it jobs, additional tax revenue and a broader economic effect, such as construction jobs and bumps in consumer spending. "You need to be very careful how you use metrics," said Lt. Gov. Brian Krolicki, who oversaw the state's economic development efforts before the Legislature handed the task to Gov. Brian Sandoval, who has made it a centerpiece of his administration. "The idea here is to bring jobs certainly, but also capital investment and strategy to Nevada's economic development efforts," he said. But one member of the 11-person Economic Development Board, which now oversees the tax incentives given to expanding and relocating businesses, said the focus should almost exclusively be jobs if the state and local governments are giving up future tax collections. "I'm surprised by the $30,000-a-job figure," said Secretary of State Ross Miller, who sits on the board. "Clearly, I think moving forward we should heavily scrutinize those decisions and make sure we are only giving abatements and incentives when it results in legitimate job creation." chris morris Steve Hill, Sandoval's economic development director, said job creation is an important element in diversifying the economy, but isn't necessarily the single most important one. Hill has much of the authority to approve tax incentives under the new structure, which was created by the 2011 Legislature to streamline the state's economic development efforts. "The capital investment, the economic impact and the taxes that those projects generate are pretty substantial, and I imagine that is what drove those decisions when they were made," Hill said. Hill acknowledged that his office does a poor job of tracking those ancillary benefits, including tax revenue that will be generated by the new businesses. He said that will change. By law, to qualify for a tax abatement, a company must meet two of three criteria: produce at least 75 full-time jobs, make a capital investment of at least $1 million, or pay a higher-than-average wage scale. A state-by-state comparison of tax incentives per job wasn't available. But an investigation recently published by The New York Times found Nevada spends comparatively less on economic development than other states. By one comparison, Nevada spent $12 per capita on tax incentives in the past decade compared with Texas, which spent $752 per capita. Top 10 tax incentive awards since Jan. 1, 2011 TAX COMPANYINCENTIVEJOBS Apple $55 million 35 Quail Hollow $6.2 million 44 Olin Corp $2.7 million 5 Urban Outfitters $2.6 million 110 SA Recycling $1.7 million 27 Toys R Us $1.6 million 51 Amonix Inc $1.2 million 337 Patriot Precision Ammunition $1.2 million 37 CC Landfill Energy $1.2 million 2 Ken's Food, Inc. 10 $1.1 million For the Health of Your Business Maria Nutile, esq. Susan M. Pitz, esq. Kelly S. McIntosh, esq. Lyn E. Beggs, esq. Celebrating 10 Years Serving Nevada's Business Community 6 20130204_VI06_F.indd 6 WWW.NUTILEPITZ.COM • • • • • Business Formation and Structure Sales and Acquisitions Contract Review and Negotiation Healthcare Compliance/HIPAA Fraud and Abuse/Licensing Investigations 1070 W. HORIZON RIDGE, STE 210 • HENDERSON, NV 89012 • 702.307.4880 675 SIERRA ROSE DR, STE 101 • RENO, NV 89511 • 775.284.1020 | @NutilePitzLaw 4 FEBRUARY 2013 | 1/31/13 3:01:41 PM