Will Nevada Diversify Its Boom-and-Bust Economy?

Nevada leaders have talked for years about the need to diversify their state’s tourism-centric economy. But the hard lessons of the recession, which has left Nevada with the highest unemployment and foreclosure rates in the nation, are giving the discussion new urgency.

In this year’s legislative session, lawmakers from both parties approved a broad overhaul of Nevada’s economic development efforts, streamlining and consolidating them within the office of Governor Brian Sandoval, and providing new funding.

Now, state leaders are considering a host of recommendations contained in a five-month, 176-page study of Nevada’s economic development strategy released this month by a group of prominent think tanks, led by the Brookings Institution in Washington, D.C. The study urges Nevada to consider a three-pronged, multi-year approach to make its economy less vulnerable to the kind of dramatic ups and downs that have put 13.4 percent of the state’s workforce out of a job and caused state revenues to plunge.

The report urges Nevada to “unify, regionalize and diversify” by creating a cohesive strategy for economic development; by placing more emphasis on regional hubs such as Las Vegas and Reno; and by making targeted investments, through tax credits and direct spending, to grow certain industries that are already poised to expand. These include online gaming, aerospace and defense, and logistics and operations.

Will Nevada leaders listen? The authors of the report think so. “The state has, frankly, over the last 18 months, recognized that its past growth model is broken and that it needs a new one,” Mark Muro, the Brookings researcher who authored the report, tells Stateline . “There’s just a seriousness and deliberateness that we’ve been impressed with.”

But journalists who spend their time at the Nevada Capitol are less confident. They note, for instance, that the report hails Nevada for its light tax burden even as it makes the case that more education funding is necessary. The Las Vegas Sun

says the study “does little to settle the more fundamental tug-of-war over how to approach economic development that has sharply divided state leaders in the past year.”

Brookings and SRI International “aren’t fly-by-night hucksters looking to make a quick buck off the rubes with fancy charts, full-color pages and big-sounding words. They’re serious people,” writes Steve Sebelius , a columnist with the Las Vegas Review-Journal . “The trouble is, we aren’t. Or at least we haven’t been up until this point.”