Rethinking the Red Carpet

Nevada needs more than low taxes, friendly regulatory environment to lure businesses
By JENNIFER ROBISON

Economic development is all the rage these days in Nevada.

The state's reliance on tourism and construction bought it the nation's highest jobless rate. Averting similar disasters later will require diversification into new industries. The topic is so hot that Lt. Gov. Brian Krolicki just launched a task force of nearly 30 people to form recommendations on bringing in new businesses. The Nevada Development Authority just rolled out another campaign in its ongoing effort to filch disillusioned companies from California, and the city of Henderson's economic-development experts are busy trying to convince as many as 60 companies to move to Southern Nevada.

So now is as good a time as any to ask what relocating and expanding businesses want. What kind of message will draw them in for a closer look, and how should those wants and needs shape development officials' marketing efforts?

Up to now, the state's most visible marketing campaigns have focused almost exclusively on Nevada's relatively low taxes and lack of red tape. But diversification officials from around the country say that single-note song might need some fine-tuning.

Sure, taxes matter, and tax-centric messages can prove effective.

Consider the Golden State meltdown that ensued in 2009, when the Nevada Development Authority unleashed a tax- and bureaucracy-focused campaign that compared California legislators to chimpanzees and highlighted Nevada's lack of income taxes and its cheaper worker's compensation insurance. California legislators bit back, though, as the Los Angeles Times noted, California businesses might indeed be ripe for the picking.

"In a tough economy when companies are looking to slash costs, some industry leaders fear poachers will be more successful this time around," the paper wrote.

And in 2008, the authority's April 15 "tax bear" campaign reminded California business owners that they'd be free of state income taxes in the Silver State. The campaign threatened the state enough that California lawmakers evaluated the ads in a hearing of that state's legislative Revenue and Taxation Committee to show how tax policy is encouraging poaching from other states.

What's more, a recent survey from Chief Executive magazine handed Nevada the No. 5 position among the best states for business, thanks in part to the Silver State's tax and regulation regime. The magazine quoted several California company leaders who said they are disenchanted with doing business in California.

"California has a good living environment but is unfavorable to business and the state taxes are not survivable," said Bill Dormandy, chief executive officer of San Francisco medical-device maker ITC. "Nevada and Virginia are encouraging business to move to their states with lower tax rates and less regulatory demands." More here.