After diversifying their portfolio over the years, Reno is back on the up and up. Mike Kazmierski, president of the Economic Development Authority of Western Nevada spoke in January, saying that in 2014, 34 companies relocated to the area, creating nearly 4,200 jobs. Unemployment was down to 6.4 percent, after 2011’s high was a staggering 14.2 percent.
The main challenge for Reno now lies in being able to manage their success. As industries, businesses, and residents grow, also growing is concern over the city’s infrastructure, schools, and city services. Robert Chisel, Reno’s director of finance, said, “Our revenues lag the demand. I need to provide fire services, police services, parks services.”
Critics blame the current tax structure of the state, which was used to lure in businesses and residents alike. The state does not take corporate or personal income, but instead collects from sales, property, gaming and mining taxes. “The tax structure isn’t based on the economy of the future. It’s based on the economy of the past,” said Stephen Brown, economics professor at University of Nevada, Las Vegas.
Brown suggests that If Reno wants to be the next technological hub, it needs a new tax structure, one which doesn’t rely on gaming and mining. Reno initially went after high-tech businesses out of desperation. In 2011, the city was on a watch list by the state for potential insolvency. Reno lost 30,000 construction jobs, an additional 500 city jobs, and housing prices dipped 58 percent.
In 2012, Apple announced an investment of $400 million for a data center. Zulily and eBay followed, as did retailers Urban Outfitters and Petco. Amazon relocated a distribution center to the region as well. However, as big as those were, they all pale in comparison to the announcement from last fall.
Tesla Motors confirmed they will open a battery factory in the city, which will create 6,500 jobs. The state didn’t get these companies for cheap though, and since 2011 have agreed to $1.4 billion in tax abatements, spread out over 38 companies within a 25 miles of Reno. The deal with Apple saw the company get a 10 year tax break which will save them nearly $55 million dollars. All Apple had to do was promise at least 35 jobs which pay an average of $25 per hour.
Tesla’s deal is good for 20 years, which will trim off 40 percent of the company’s taxes, and costing the state $1.3 billion in lost revenue. However, Nevada feels it will be offset by 22,500 additional jobs and $955 million in annual income for local businesses.
