In his Jan. 23 State of the State address, Nevada Gov. Joe Lombardo outlined his ambitious legislative agenda for 2023.
He wants to suspend the state gasoline tax for a year, make the single largest education investment in Nevada history, and raise state employees’ pay 12 percent over the next two years.
The Republican governor also proposes strengthening penalties for criminals, creating a new state office to expand school choice and called for election reforms to ensure election integrity.
Lombardo says all his initiatives can be accomplished with no tax increases.
He inherited a robust state treasury after the massive infusions of federal money given to states and a strong post-pandemic recovery of Nevada’s gaming revenue.
On Jan 23 the governor teased news that Tesla plans to spend $3.6 billion more on expanded battery and heavy duty truck manufacturing in Nevada.
The following day, Lombardo tweeted a photo with Tesla CEO Elon Musk confirming the company’s commitment.
According to public statements, Tesla intends to hire 3,000 more people across two facilities at the Tahoe-Reno Industrial Center.
Since 2014, Tesla has already invested $6.2 billion in Nevada and hired more than 11,000 employees to produce battery cells in partnership with Gigafactory co-investor, Panasonic.
In his State of the State speech, Lombardo identified “restoring Nevada’s reputation as a pro-business, pro-development state” as a top priority.
His proposed budget lowers small business payments of the Modified Business Tax by 15 percent, while raising the exemption for larger businesses subject to the Commerce Tax by 50 percent, from $4 million to $ 6 million.
Lombardo called on Nevada to be “the most entrepreneurial-friendly state in the nation.”
He urged providing a pro-business environment for Nevada’s 350,000 existing businesses and offering a pro-development invitation for the expansion of new business.
“Whether it’s closing the lithium loop, unlocking innovation in logistics, entertainment, science and technology, or embracing entrepreneurship, the message is, Nevada is ready to partner,” Lombardo proclaimed.
He added: “Proceeds from our economic investments must be responsibly reinvested, and we must ensure they are used to address the transportation, education, housing, and public safety demands created by our continued growth.”
A recent Hoover Institute report concludes our neighboring state’s business exodus soared in 2021 “and there is no end in sight.”
In 2021, California business headquarters left the state at twice their rate in both 2020 and 2019, and at three times their rate in 2018. In the last three years, California lost 11 Fortune 1000 companies.
Media headlines reported the loss of high-tech legacy firms including Hewlett-Packard Enterprises, Oracle, and Tesla, all moving to Texas.
Moreover, even companies that retain their California headquarters are making large facility investments in other states, such as Apple and Wells Fargo in Texas and Disney in Florida.
But California is also losing much smaller but rapidly growing unique businesses that are leaving and taking their innovative ideas with them.
Why are companies leaving?
Economics, plain and simple. California state and local economic policies have raised business costs to such high levels that businesses move to states with better business climates, much less regulation, much lower taxes, and lower living costs.
Annual surveys of business CEOs and small business owners invariably rank California 50th in terms of state business climate.
Since 2015, California has experienced a net outmigration of nearly 700,000 people.
The Hoover report identifies Texas as by far the major state for California business relocations.
It notes AquaMetals as making a California exit – and choosing Nevada.
Reno-based AquaMetals has developed a unique way of recycling strategic and rare metals, including lithium. It has invented much more environmentally friendly metal capture processes.
Nevada is the only state with companies across every facet of the burgeoning lithium battery supply chain – mining, manufacturing and recycling.
California’s follies can become Nevada’s new business opportunities.
E-mail Jim Hartman at email@example.com.
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