TACTICS LAID BEAR


Grin and bear it.

Bear the brunt.

Loaded for bear.

If you're still reading, you like puns, clichés and other word plays on "bear." And if that's the case, you'll really like the Nevada Development Authority's latest assault on California's business climate.

The authority last week began unveiling a series of 40 political cartoons it's placing as advertisements in business journals and daily newspapers across the Golden State. The ads center on the famed grizzly that graces California's flag; one tells businesses tired of carrying "the un-Bear-able load" to consider moving to Nevada, while another asks Californians, "More bad news, bear?"

The ads are the latest salvo in a years-long battle for businesses from California. Prior campaigns, with their cheeky tones, have received attention from news media including Time magazine, the Los Angeles Times and The Washington Post, and in 2004, California Gov. Arnold Schwarzenegger came to town with a moving truck to issue some witty rejoinders to the authority's efforts in person.

With a potential recession looming, though, and debate about a corporate income or receipts tax heating up in Nevada, is this the best time to open a new front in the war for California businesses?

Yes, said Somer Hollingsworth, president and chief executive officer of the Nevada Development Authority. California will need $7 billion in new taxes to cover its budget, and public-employee retirement burdens statewide are poised to claim tens of billions of dollars in benefits.

"The wheels are starting to come off of California again," Hollingsworth said. "Things are starting to heat up there, and we want to get in on the front end. It's time to see if we can push some buttons and get responses from businesses."

But Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., said shaky economic times don't typically make for successful business-recruiting efforts. That's because uncertainty makes company owners nervous, and they tend to stay put while they wait out a struggling economy.

Talk about plugging Nevada's own $500 million budget hole with a corporate income or gross-receipts tax could also mean fewer fruits from the development authority's latest campaign, Kyser said. The entrepreneurs Kyser works with tell him Nevada doesn't boast a highly skilled work force, and freighting costs out of Las Vegas in particular are high thanks to the narrow-bodied passenger airplanes that compose most of McCarran International Airport's traffic. Where the state does beat California, he said, is in its less-expensive housing and its lack of business taxes.

"A corporate income tax would definitely take away a lot of the allure of moving to a Nevada location," Kyser said.

The Nevada Development Authority's campaign does get some elements right, Kyser acknowledged.

First, the authority is persistent. It launches new marketing initiatives in California every few months, so its message has better odds of staying top-of-mind among companies mulling a move.

Second, California faces a genuine fiscal crisis that far outstrips Nevada's troubles. California's budget deficit sits at $14.5 billion, and state officials will have to cover the shortfall somehow, Kyser noted. Executives are increasingly worried that they'll be on the hook for the state deficit, as well as lower city revenue from the housing crunch and faltering retail sales.

Add in a state capital in Sacramento that feels like a "foreign country" because of its disconnect with business districts in Southern California, and you have more than a few area businesses primed for relocation, Kyser said.

That alienation is exactly what Hollingsworth is hoping to exploit.

He's already had a couple of Midwestern businesses back out of relocations at least temporarily because of the economy, so he knows the downturn will weigh on businesses that want to move.

He's also "sure" some prospective new companies would put deals on ice if discussions about business taxes heated up, if only so they could get a solid grip on the costs that might come from potential new levies.

Yet, he's convinced businesses in virtually every other state would find, upon research, that they'd still get a better tax deal here than they would just about anywhere else. He wants to keep that thought front and center, even in harder times.

"If nothing else, at least we can plant some seeds and begin to work with some businesses a little bit," Hollingsworth said. "If we can talk to them and get them thinking about Nevada, then when the economy smooths out a little bit, we could have their business."

The authority is planning ad buys in additional business journals, as well as in the Los Angeles Times, the Sacramento Bee and the Orange County Register, in the next five months.

Authority officials will also head to San Diego in June for the BIO International Convention, the nation's largest biotechnology-focused trade show. Last year's Boston trade show, which authority executives attended, drew 1,800 exhibitors and 19,000 industry members. The authority is considering bringing an ad-wrapped bus to the convention to draw attention to the group's mission. A similar tour across California in 2006 featured Las Vegas Mayor Oscar Goodman and yielded newspaper and broadcast stories statewide.

"We just think it's time to move around a little bit and get some publicity," Hollingsworth said.

Representatives of the California Chamber of Commerce said they're not too concerned about the authority's latest portrayal of their state's business climate.

Denise Davis, a spokeswoman for the chamber, hadn't seen the ads by Tuesday afternoon and wouldn't comment on the authority's campaign specifically, but she said her trade group isn't threatened by competition in general.

"Employers face challenges in California, but it's a very attractive place to do business," Davis said. "We have a very tremendous talent pool to pull from. We work hard to stave off challenges to business in this state so companies can remain competitive."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or (702) 380-4512.

 

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