Feature Stories - February 2004

Power Poll

Nevada’s Business Leaders Discuss the Issues

by Kathleen Foley

Many events have occurred to change the country and the state since our last Power Poll, which was published in March 2003. The war with Iraq flared up in the spring, and battles almost as fierce were fought last summer in Carson City, during a legislative session that ended up authorizing the state’s largest-ever tax increase to fund Nevada’s budget shortfall. New issues have come to the forefront, but some chronic challenges, like the Yucca Mountain question and the water shortage, are holdovers from previous years that refuse to fade away.

This year’s Power Poll asked CEOs and executives throughout the state for their opinions on nine questions about economic, political and social issues. Two of the questions were duplicates from last year, so we could gauge if opinions had changed since then. All answers were given anonymously, unless the respondent requested to be interviewed, so we can assume the results present a fairly accurate picture of what Nevada’s business community was thinking at the beginning of this new year.

Paying Nevada’s Piper

Last year’s poll revealed that an overwhelming number of Nevada business people were against the gross receipts tax then being proposed. Although a different tax system based on payroll was enacted, this year’s numbers show the business community still expects to be hit hard by increased taxes. Although some were still unable to determine the impact of the new taxes, none of the respondents estimated they would pay less.

"For most business people, any tax is a bad tax, because it’s an added cost," explained Larry Carroll, principal of Poggemeyer Design Group in Las Vegas. "However, the business community is willing to pay its fair share, which we’re doing with this payroll tax. When the various plans were being considered, we believed a tax system based either on gross receipts or on payroll would have been fair, and either one would have been better than what we most feared, which was a tax on professional services."

Health Insurance Incentive Ineffective?

Many Nevadans, including the participants in Nevada Business Journal’s recent roundtable for healthcare professionals, are concerned about the growing number of working people in Nevada with no health insurance coverage. In an effort to encourage more companies to insure their employees, a provision of the new tax law allows an offset for the cost of healthcare insurance premiums. Our Power Poll shows this strategy doesn’t seem to be working – resounding zero percent are offering more coverage than before. Perhaps, like Jackie DeLaney, president/CEO of Sun West Bank, they are waiting for the dust to settle to see what their new tax burden will be and explore how to make the offset work for them. "We will evaluate appropriate opportunities to provide employees with the coverage they want," said DeLaney. "We haven’t had a chance to look at all the possibilities yet. We will survey employees to find out what they want, and then price those options to see if they are cost-effective. We certainly want to enhance employee relationships and become a preferred employer, and benefits are a big part of that."

Business Insurance Pressures

Fewer than 6 percent of people responding said their business insurance costs were the same or less than last year, and all the rest had increased. David Hall, managing partner of L.L. Bradford CPAs in Las Vegas, said although his own insurance costs had gone up between 25 percent and 49 percent, several of his clients have gone out of business due to problems caused by rising insurance premiums. "One contractor had to close his doors because his business liability insurance premium had gone up 400 percent and he could no longer function at that level of expense," he said. "Another client, a roofer, couldn’t even get insurance and had to close down." Medical clients had a 200 percent or 300 percent increase in their insurance premiums, reported Hall, who said some decided to leave the state or to restructure their practices to avoid liability (e.g., stop delivering babies).

Yucca Mountain Revisited

Efforts to keep nuclear waste out of Yucca Mountain seem to be losing headway, as fewer people this year voted to "do whatever is necessary" to prevent Nevada from being the country’s nuclear dumping ground. Most indicated they weren’t happy about the proposal, but if it is inevitable, the state should at least receive some compensation. "We may or may not ever have to negotiate, but we certainly do not have to negotiate at the current time," said George Ogilvie, managing partner of McDonald Carano Wilson LLP, a law firm with offices in Reno and Las Vegas. "We should exhaust every judicial and administrative remedy before considering negotiations."

Attracting New Businesses

Despite the recently-enacted tax package, the state’s tax structure was once again voted the most important factor in attracting new businesses to Nevada. In fact, when these same five factors were presented last year, they were ranked in exactly the same order. One respondent noted, "This is a tough one to rank, as most could be number one."

Right behind taxes came the availability of a trained workforce and the state’s education system, which are two sides of the same coin.

Incentives offered by the state didn’t seem to factor into the equation. In this chicken-and-egg scenario, state lawmakers refuse to vote much funding for economic development because it is ineffective; but economic development proponents argue they can’t do as much as they’d like because programs are chronically under-funded.

Mark Brown, president of Brown & Partners in Las Vegas, marked the education system as the number one factor considered by businesses looking to relocate. It also ranked as his top area of concern. "Education obviously impacts every aspect of our economy," he stated, "both for existing businesses and for economic development efforts. We need to increase our per-student funding in K-12 by $1,000 to $1,500 per student in order to graduate folks who are immediately employable."

While most Southern Nevada respondents marked "tax structure" as the top factor in attracting companies to the state, business people from rural and Northern Nevada were more likely to mention quality of life. "The beautiful natural surroundings are our single biggest attraction in the Reno/Tahoe area," explained Robert Jones, executive director of the Builders Association of Northern Nevada. "However, if the other factors, like our tax structure and business-friendly environment, weren’t here, the surroundings wouldn’t mean as much. There are other pretty places people could locate."

Perennial Concerns

The drought causing problems throughout the Southwest has been a major concern for business people, and last year it was also chosen as the number one problem, out of a slightly different group of choices. Quality of education ranked a close second, tying in with the comments made about education affecting economic development. Despite the uproar they caused during the last legislative session, shortfalls in the state budget ranked last among the listed concerns. Someone who depends on growth for his livelihood, Larry Monkarsh, owner of L M Construction Company in Southern Nevada and also a real estate developer, marked "problems caused by growth" as his top area of concern. "Growth causes rising land prices, worsening water shortages and problems with schools trying to keep up," he said. "I come from California, where a no-growth policy hurt the state, so we can learn from their mistake and be careful not to adopt a slow-growth or no-growth mentality. However, city and county planning is of utmost importance to keep uncontrolled growth from causing more problems."

"What Happens in Vegas…"

We were curious to know what business people thought about the Las Vegas Convention & Visitors Authority’ controversial ad campaign. Business owners were equally divided but the final numbers showed a majority thought it is "appropriate".

The Next Election

It should come as no surprise that almost 43 percent of those responding planned to support the Republicans who held out against the passage of Gov. Guinn’s original tax package, which found little favor in the business community. However, an even 50 percent were either undecided or said the events of 2003 wouldn’t affect how they’ll vote next time. "A significant number of business people will support the legislators who opposed the Governor’s tax plan," said John Pinjuv, president of Grubb & Ellis in Reno. "The people who stood their ground will be rewarded, because their philosophy is more in line with what progressive business leaders think."

Public Employees in the Legislature?

The controversy over double-dipping by state legislators who draw a paycheck from other government agencies surfaced at the end of the last legislative session, and was highlighted by the scandal involving Assemblyman Wendell Williams and the firing of Kathy McClain and Kelvin Atkinson. Don Bright, director of education for Bright Trading in Las Vegas, said he supports the right of public employees to serve in the Legislature. "Public employees are more aware than the average person of how government systems work and interact," he noted. "However, there should be a review of who’s paying whom, with full disclosure and no double-dipping."

R.J. Gillum, owner of High Desert Automotive and Storage in Goldfield, said public employees shouldn’t be allowed to serve because, "Greediness rules. People will continue to vote themselves raises every year because they have no accountability. As they do, these government positions seem more attractive to the weak, who flock to them. Government gets bigger and bigger and free enterprise is being eliminated." Over 66 percent of those surveyed said public employees should not be allowed to serve in the Legislature, so this issue shows promise of remaining on the front burner for some time.

Suggestion Box

If there are questions you want to see answered in next year’s Power Poll, please submit them through our Web site at www.nbj.com/feedback.html.

Kathleen Foley
Kathleen Foley is a freelance writer based in Southern Nevada.