Though not known for exporting much more than silver and gold, Nevada still ranked first for export growth and export intensity growth in a June report from the U.S. Chamber of Commerce.
Nevada was also second in both state and local tax burden and in the small-business survival index, according to the chamber’s 135-page “Enterprising States 2011” report.
Still, Nevada is looking at a $1.5 billion budget shortfall, or 45.2 percent from fiscal year 2011, the highest in the nation.
“Facing one of the largest budget deficits in the nation, battered property markets and unemployment rates flirting with 15 percent, Nevada remains saddled with some of the most vexing economic challenges of any state in the nation,” the report stated.
Yet Southern Nevada’s economy is starting to show signs of a turnaround. Unemployment has fallen to 13 percent, taxable sales have increased year-over-year and the important gaming and tourism sectors have seen an uptick in activity.
Nevada is the nation’s fastest-growing export state, as well as the fastest in growing export value as a share of its total economy, the U.S. Chamber noted. The value of the state’s manufactured exports has more than tripled since 2002. Its primary exports are minerals, coin-operated games and various electronics.
Nevada was No. 1 in export intensity growth because of rising gold prices, said John Restrepo, principal of RCG Economics in Las Vegas. Export intensity growth measures the change in dollar value of manufactured exports per dollar of gross state product, he noted.
“Since they measure by value, not volume, gold has gone up so much that the increase in value had a great impact,” Restrepo said Wednesday. “Secondary is the selling of gaming equipment to other jurisdictions like Macau and Singapore. But the primary driver is the rapid rise in the price of gold. So let’s not get wrapped up in export growth. It’s not based on the manufacturing of products.”
International exports have been a big part of Las Vegas-based Bally Technologies’ growth over the past 10 years, CEO Richard Haddrill said.
Bally’s export revenue grew 10 percent, to $160 million, in the last year, he said. Exports are 20 percent of the company’s production, compared with 9 percent in 2005.
“A lot of it is expanding into Mexico, South Africa, Macau and now we’re going into Australia,” Haddrill said. “So it’s new market growth and penetration in the market.”
Las Vegas has a few advantages in competing for international business, including a world-class airport, favorable tax structure, diverse work force and a “welcoming atmosphere” for international visitors, Haddrill said.
The U.S. Chamber report highlighted a number of areas where Nevada excels in supporting international trade activity.
The Nevada Commission on Economic Development works to identify and support foreign companies interested in establishing operations in the state. Through its global business development division, the state maintains a network of independent trade representatives in Shanghai, Beijing, Hong Kong, Germany, Brazil and Italy, the report said.
The state also hosts “inbound buying missions” where foreign buyers are brought to Nevada and connected with local companies.
Nevada has foreign trade zones in Las Vegas and Reno that allow businesses access to expedited customs processing and decreased duties and excise taxes.
Efforts to designate a Las Vegas World Trade Center came to fruition early this year, giving the state a high-profile venue to attract international corporations to the region, potentially laying the foundation for increased trade and associated jobs.
The Nevada District Export Council is another program affiliated with the federal government, providing trade support services to small and midsized businesses in the state.
Nevada also achieved high rankings in job placement efficiency and long-term job growth. Nevada’s job creation efforts are supported by tax incentives and an enterprise-friendly tax code, the U.S. Chamber report said. Nevada has no corporate income tax, no personal income tax, no franchise income tax, no estate tax and no gift tax.
Businesses that meet job creation and wage criteria are eligible for sales and use tax abatements and deferrals. The abatements are also applicable to purchase of capital equipment.
Innovation and entrepreneurship-driven job creation is also a point of focus for Nevada’s economic development plans, the report said. It mentioned the Nevada Center for Entrepreneurship and Technology, a nonprofit organization providing programming and support services to entrepreneurs. Small businesses in search of support services are also served by the Nevada Microenterprise Initiative.
Somer Hollingsworth, president of Nevada Development Authority, said the report shows the recession is easing somewhat.
“Nevada is on the cutting edge of coming out of the recession,” he said. “If our exports are increasing, we’re ready to go forward with more exports and more manufacturing coming to Nevada.”
The chamber analysis flounders when it says Nevada’s economic challenges come on the heels of yet another decade of strong population growth for the state, Las Vegas economist Tom Climo said.
“While 30,000 people a month were moving into Las Vegas during the boom, 10,000 were moving out,” Climo said. “This proposition has now reversed itself. No doubt the huge loss in construction employment is one of the more explainable causes. Foreclosure and unemployment rates — especially in gaming, tourism and casino — are others.”
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.