I was on the line with a source at Tesla, and we were talking about something entirely unrelated when I wound down the discussion with, “So, you guys might put that battery factory in Nevada, huh?”
“Yeah, that’s not going to happen,” the source replied.
But isn’t the state a finalist, along with Texas, Arizona and New Mexico? It’s all the rage. The electric car juggernaut is weighing where to put its $5 billion factory.
“The schools,” the source said. “I don’t think we realized how bad they were. I can’t say anything definitive, but it’s not looking likely.”
And there it is again, Nevada trapped by its own disregard for the importance of funding education at a level that shows the world it actually values it. As Rep. Dina Titus always used to say, we’re on the bottom of the good lists—No. 43 in per-pupil spending, No. 49 in higher education spending—and, with that stratospheric dropout rate, the top of the bad ones.
It’s an old story with a new twist: Gov. Brian Sandoval seems to seriously believe that major tech companies will relocate to Nevada on the strength of some tax incentives and, one must presume, his considerable personal charm. He points to a few recent successes and takes full credit for an impressive dive in the unemployment rate.
The Sandoval re-election campaign will undoubtedly trumpet a recent Labor Department report proclaiming Nevada as having the highest job growth rate in the nation last year. Efforts to diversify the economy away from its total reliance on tourism, gaming and mining, we will surely be told, are finally bearing some fruit!
But data can tell you anything you want to hear. If job numbers fall far enough, as they did during the Great Recession, their recovery looks big on a percentage basis. It’s great for re-election ads, even if most of what has happened was inevitable.
Look closer: The job categories that went up were all the usual suspects—leisure and hospitality with about 11,000 new positions, health care with about 5,000, retail and wholesale trade with about 7,000, construction with about 4,000. Last week, Sandoval announced that a bunch of tech companies that support the nascent drone industry may locate here, but that’s not as much because Nevada’s so wonderful as it is that our congressional delegation persuaded the FAA to choose Nevada as one of six locations for testing. The state’s vast emptiness made it especially attractive.
Meanwhile, nothing fundamental has actually happened to alter the national perception of the Nevada economy or educational infrastructure. In fact, for all the talk about school reform, every powerful business interest in Nevada plans to blitz the airwaves to defeat this fall’s ballot measure that would raise $800 million for education by hiking the business tax on very successful companies by 2 percent.
Indeed, even after decades of failure to diversify, Nevada leaders’ hymnals remain open to the Gospel According to Chuck Muth. Sing it with me: Low taxes plus minimal regulation equals economic boom.
Yet if that’s so, why does anyone open new businesses in California, the very definition of high taxes and high regulation?
I asked that question to many tech big wigs during my stint at Politico, from Netflix’s Reed Hastings to Jack Dorsey of Twitter and Square. If you had to choose between lower taxes or a highly skilled work force, I always asked, which would you pick? Not one successful tech company leader chose lower taxes. None.
Why open businesses in overtaxed, red-tape-loving California? The schools! The many, many universities and the well-funded public schools! It seems that the smart people those companies seek to attract want to live and raise their families there because they want their friends and their kids to be smart, too!
Maybe the pending ballot initiative isn’t the right tax balance. Maybe there would be some short-term economic pain as a result. But this much is indisputable: For Nevada to turn itself into a place where smart people want to live, work and create wealth, education needs that kind of massive cash infusion as soon as possible.
The low-tax, low-regulation sales pitch has been on the table for decades. Yes, Nevada had an amazing boom, but we coasted on hype and ignored signs that those jobs and that wealth depended almost entirely on factors beyond our control.
Maybe there’s something more, something radical that has to happen to prove that Nevadans want better schools? If that had happened 10 years ago, maybe the momentum would have encouraged the Tesla folks. But it didn’t.