Archive for category Nevada
Ty Cobb: The New Energy Equation
Posted by Tom in Energy Facts & Policies, Nevada, Yucca Mountain on November 29, 2011
Ty Cobb’s interview on Anjeanette Damon’s To The Point show on News 4
gives an interesting summary brief on the new energy equation:
It’s good to have him in our group.
May Dinner Update
Posted by Tom in Nevada, State Finances, Symposium Notes on May 18, 2011
Andrew Clinger, Nevada’s Director of Administration did an excellent job of presenting an overview of the state’s budget problems and solutions. A few slides illustrate his points:
Nevada’s employment bubble exploded in the recent recession with a loss of 417,000 jobs, 27% below the historic trend line. The states largest employers gaming and construction both suffered with construction declining 68% below trend. Booming Nevada was and is an employment bust.
One of the points little understood in the main stream media reporting is that the Legislature and Governor are only dealing with the General Fund which is only 35.7% of state revenue. This is what all the budget fights are about. The balance of the funds are beyond state control and in some cases, as with Federal Funds, really exacerbate the states budgetary problems. Medicaid, one time stimulus unsaved both hurt more when reduced or eliminated.
Education both higher and K-12 account for fully 53.5% of the appropriations. The other big chunk is Human Services at 30.6% of General Fund appropriations; this is greatly influenced by Federal mandates particularly Medicaid.
Bottom line, the Governor’s budget at $6.13 Billion is only $212,339,021 less than the prior biennium budget. That 3.35% reduction is what all the complaining is about. Anyone for camping out in front of the Legislature in protest?
Andrew was good enough to take questions and hear comments on his state presentation and to a limited extent on his new job as Reno City Manager. We thank him for the excellent evening and wish him all the best in his new and challenging position in Reno.
Wake Up Nevada: New Industry Needed
Posted by Tom in Nevada, State Finances, Yucca Mountain on May 18, 2011
This op-ed from Tom Cargill and Mark Pingle as published on the RGJ May 17th.
Nevada’s near monopoly on legalized casino gambling fueled an economic boom that made it the fastest growing state for five straight decades. The associated business development and population in-migration supported a construction boom, making Nevada’s construction sector larger than that of any other state.
However, Nevada no longer has the “only game in town.” Proliferated Indian gaming and legalization in other states have especially hurt Northern Nevada gaming, and world-class gambling in Asia means Las Vegas is also no longer immune to competition.
Moreover, the recession has decimated Nevada’s construction industry. An economic storm has blown Nevada from the top of the economic heap to the bottom. The state is in need of an economic makeover, a hard reality Nevada must face.
Economic diversification has been the clarion call of Nevada policymakers for decades — easier said than done. Most diversification efforts amount to “two birds in the bush,” laudable but iffy. We suggest it is time to consider a “bird in the hand,” a more certain route to diversification and to shoring up Nevada’s fiscal house.
A fundamental entrepreneurship dictum is “problems create opportunities.” Disposing of nuclear waste has long been a significant national problem. As a result, there is a tremendous entrepreneurial opportunity for Nevada.
President Obama has indicated nuclear power will remain an important part of U.S. energy policy despite Fukushima. Nevada should not ignore the Yucca opportunity because of unfounded fears, special interests nor political pandering.
The choice of Yucca Mountain in 1987 as the preferred long-term storage site for nuclear waste put a bird in Nevada’s hand. To date, most Nevada policymakers have preferred not to have this bird in Nevada’s backyard. The “not-in-my-backyard” argument played well when the gaming and construction bushes were supplying so many birds, but times have changed. Pursuing Yucca has advantages, economically and politically.
Economically, Yucca Mountain, merely as a storage facility, would provide substantial long-term employment, state tax revenues and some of the illusive diversification Nevada has been seeking. Wise negotiation could increase these benefits by moving the facility toward becoming a reprocessing center and a focal point for nuclear research dollars.
Politically, developing Yucca Mountain offers an alternative to two that are unattractive. Should Nevada be cutting government services that support economic development and diversification at this time? Proponents say no, but the tax increases necessary to fund the services would work against any diversification effort. Developing Yucca provides a path for maintaining some valuable government services without tax increases.
As economists, we are trained to count costs and benefits. Developing Yucca Mountain would not provide Nevada with a free lunch. There are risks and challenges with any entrepreneurial venture. There will be costs and risks. But, it is unprofessional to ignore the benefits and potential, which is the tendency of NIMBY adherents.
It is time to reconsider the development of Yucca Mountain.
Thomas F. Cargill and Mark A. Pingle are professors of economics at the University of Nevada, Reno.
Only in NEVADA…Little Scams That Would Make Mark Twain Proud!
Last afternoon and evening I witnessed an amazing operation of a statutorily imposed conflict of interest. Nevada statutes require the county commission to act as the fire-board in each fire protection district created within county boundaries eventhough the fire protection tax rates are different for each district and indeed for the county. The Washoe County Commission acts as the Sierra Protection Fire District Board and the Truckee Meadows Fire Protection District Board, all while acting as the Washoe County Commission for Washoe County fires!
It was truly mind-boggling to see the commissioners in mid-agenda item take off one hat, put on another, then take that off only to return to the original hat. The statute requires that each District be a separate taxing jurisdiction and that taxes collected for that district be segregated and held for the fire protection and emergency service specifically for that district.
Last night the Washoe County Commissioners represented the two special districts and the overall county in which they exist. The residents of each district in attendance knew enough to know that no one was representing their interests. The logical result was competing public statements from residents of each district as to how to best serve…….themselves! Of course, the smallest district with the least number of residents was most represented and they, most adamant that they deserved the best protection, even to the detriment of the most populated areas Sure can’t blame them.
And the County Commissioners, used to dealing with the pot of other people’s money as they saw fit from time to time were surprised at the attendance and what seemed like the interminable public comment. People actually expect their taxes to be spent within their district! The nerve of them. And on top of that the wanted EMS and fire service in time frames that has some slim chance of preserving life and property.
And much to everyone’s surprise, after 15 years, the commissioners actually hired a consultant to drive through an area within one of the districts they represent and also within the county they represent. The area, ArrowCreek, is a common interest community of over 1100 homes and sites, and two nearby elementary schools. (Common interest communities pay full county property taxes but get few or no county services. This dirty little scam is referred to at the Nevada Plan.) The consultant found this to be a relatively high-density area, with nearby schools and adjacent to other similar density areas. The consultants determined that ArrowCreek should not have the RURAL designation it now has under the Commissioners own Master Plan! It should be classified as SUBURBAN! You guessed it, RURAL requires much less protection than SUBURBAN. The Commissioners other dirty little scam has been to take full fire taxes from this area yet provide no effective fire service to the area.
Solutions? Repeal the statutory conflict of interest, NRS 473.040 and replace it with elected, non-compensated fire-boards within each district, ASAP! ALTERNATIVELY, for the county, adjacent fire protection districts and cities within that county consolidate all under one elected, non-compensated board of directors. Here that would be Washoe, Reno, and all fire districts within including TMFD and SFPD. Any so-called regionalization via contract short of that will not work. We will be back to the dirty little internecine scams with attendant conflicts of interest and bickering!
Hat tip to the County Commissioners for being open to “thinking outside the box,” and being willing to consider full consolidation. By the way, thanks for your service and I wouldn’t want your job!
Harry Reid…Nevada Doldrum
Posted by Tom in Housing, Nevada, Politics, Real Estate, Unions, Yucca Mountain on February 23, 2011
Old Harry sure has done a lot for Nevada, or is it to Nevada?
Here’s some recent foreclosure data for Reno and Las Vegas:
One in sixteen homes in Reno is in foreclosure; and one in nine homes is Las Vegas is in foreclosure, that’s 11%!
The unemployment rate in the state is 14.6%
Yet Reid rejects a Nevada Energy Park plan for nuclear reprocessing and generation which would not only bring thousands of jobs to the state but create a Nevada Permanent Fund, much like Alaska’s, that would pay each family an annual dividend of over $2,000! Harry is sending jobs and money to other states.
Oh, if that’s not enough, Harry now wants to ban prostitution! Yep, kick another industry out! Makes no sense at all. At least these folks work for a living, something Harry who had fed at the public trough for too many years, doesn’t understand!
Maybe Harry just got religion or something. If that’s the case, the gaming industry should start to worry. After all he may next consider gambling a vice!
The public union bosses should apologize to their members for getting this idiot elected. It’s the members who are suffering, not the fat cat bosses.
Open Letter to Congressman Dean Heller on Yucca
Posted by Tom in Nevada, Politics, State Finances, Yucca Mountain on February 21, 2011
Dear Congressmen Heller,
We were disappointed to learn of your support for Senator Harry Reid in blocking the Yucca Nuclear Repository. You proposed an amendment that would have defunded the project entirely. Many citizens of Nevada are pleased your amendment was defeated by voice vote.
As many informed citizens believe, Yucca could be an important resource to Nevada, every bit as important as the Alaska Pipeline was and is to Alaska. The proposition to convert Yucca to Temporary Storage, Nuclear Reprocessing, Energy Research and Development and eventually Nuclear Power Generation is a treasure available to Nevada that no other state has. With it Nevada can create a new industry, thousands of new jobs, and a more diverse economic base. With it Nevada can resolve its structural state deficit. And, most importantly, with it we can create a Nevada Permanent Fund under which each family in the state would receive an annual dividend eventually approximating $2,500 per year.
This concept has been overwhelmingly endorsed by several knowledgeable business groups, both in Reno and Las Vegas. It has been endorsed by every social service organization to which it has been presented. And it has been endorsed by every conservative political action group that has heard it.
We believe your amendment seems somewhat out of touch with current thinking.We have formed a group, the Reno Hayek Symposium, which is a voluntary group of conservatives in Northern Nevada. We are in conversations with our friends in Las Vegas to develop a comparable Hayek Group.
We hope to be able to support you in future elections. But, with all due respect, a word of caution is necessary: emulating Harry Reid in blocking the one uniquely available resource open to Nevada, is not the way to gain that support.
Sincerely,
Kudos For New York’s Cuomo
Posted by Tom in Budgets, California, Democrats, Fiscal Policy, Nevada, State Finances on February 3, 2011
Applaud conservative, fiscally responsible ideas in public office whenever and wherever you find them; and today’s kudos go to Democratic Mario Cuomo, the governor of New York. According to today’s WSJ editorial, he has exposed the fraud of “baseline budgeting.” (See: Cuomo’s Lesson for House Republicans.)
“The budget that Mr. Cuomo unveiled this week closes a gaping deficit with major budget reductions, calling for spending cuts in state hiring, education, health care, aid to universities and payments to cities. The plan would balance the Empire State’s $135 billion budget without a dime of new taxes or borrowing. Remarkably, if his budget passed, the state would spend $3.5 billion less than it did last year.”
“These cuts are impressive on their own, but Mr. Cuomo’s real conceptual breakthrough is to expose the rigged-game of “baseline budgeting.” This is a gambit by which spending increases automatically each year even before a Governor submits his budget. The “baseline” grows each year due to spending formulas that legislatures build into the law even before they take a single vote.”
Guess what? The United States, the State of California, the State of Nevada and many others use baseline budgeting! That’s right. The budgets are in deficit before they are submitted. Most if not all of those less than adequate, so-called public services have automatic ups built into their continuation.
Courageous political leaders proposing a zero-based look at these bureaucracies are accused by the left leaning media of “cutting” education, healthcare, tree-hugging or whatever. But with government growth at most levels out of control, cut they must.
As the Journal editorial points out, the Republicans should sieze the opportunity in Congress to start the budgetary reform. And soon.
Let’s Hire More Government Workers
Posted by Tom in Academics, Deficit, Economics, Education Facts & Policies, Fiscal Policy, Nevada, Taxation, Unions on January 12, 2011
It’s wrong to pick on public workers, so I hesitate to write this post; but when the public workers profess to teach students at college and post graduate levels, pick on ‘em we should, and hard!
I speak of an op-ed in today’s edition of that bastion of elite journalism, the Reno Gazette Journal, by Tom Harris and Elliott Parker. Harris is a professor of “resource economics” and more frighteningly “director of the University Center for Economic Development.” Parker is a professor and chairman of economics at UNR’s College of Business.
The article, What is the effect of taxes on state economies? compares Nevada’s GDP growth to the “share” of GDP “provided by state and local governments” during the past 45 years and concludes that Nevada’s small government did not cause it to be the fastest growing state! No correlation here. Yeah, how about that?
Being economists, however, they struggle and find a strong correlation between real GDP growth and and “lagged growth rate of its state and local government!” Whew! I was worried about that.
Perhaps our good professors don’t realize that Nevada’s state and local government spending has grown more than the population growth plus inflation with little to show for it save deficits and unfunded liabilities. Or perhaps they aren’t aware of the slight deficit problem here caused to a great extent by public employee unions at the local level. Or perhaps they don’t read the Wall Street Journal which published the following chart in discussing spendthrift Illinois and the great migrations away from the tax, borrow and spend fools in state governments.
Anyway, back to the article, our authors continue searching for a reason for the non correlation in one case and strong correlation in the other. “One way to look at it is that state and local governments provide essential public goods that cannot be adequately provided by the private sector, such as roads and education. While higher taxes might create some disincentives for private investment and growth, many of these public goods are necessary investments for the private sector to function.”
I love that “essential public goods that cannot be adequately provided by the private sector.” And they use education as an example, later stating that “without good public education, the private sector lacks the educated work force it needs.” Nevada public education is at the bottom of the barrel and the more money we throw at it the worse it gets. Oh, but our professors are in the education business, a business whose prices dramatically outpace inflation and in truth outpace value delivered.
But what’s the point of the article, well it’s an exposition of the Keynesian multiplier. You know the one Obama rolled out for his stimulus billions. Government spends a dollar which creates $1.50 in GDP. It’s as if that dollar comes out of thin air. In truth that dollar is taxed currently or borrowed and repaid with later taxes (grandchildren look out!). In either case there has been a misallocation of what could have been productive capital.
Ah, but our good professors use the Keynes multiplier in reverse, a dollar reduced in state or local government spending will diminish GDP by $1.62! “Firing a school teacher means less money is spent by that teacher on rent, food and other goods!” They fail to mention that the teacher might be deadwood kept on in tenure by the infamous teachers union which accounts for a significant portion of the current deficit and unfunded liabilities. But the real sin is that the dollar saved by firing that non productive teacher might have been invested and produced $10 dollars in GDP.
Finally they elevate the sin to the level of a crime in discussing the multiplier effect. “Economists teach this to every first-year student in macroeconomics, and estimates from real data consistently find it to be true.” This of course is not true, not even a half truth as Obama has demonstrated.
Besides, if this were true we should all go to work for the government, since there is no “essential public good” it doesn’t seem to have its hand in.
Other States Poach Nevada’s Golden Opportunity
Posted by Tom in Environment, Homeland Security, Nevada, State Finances, Terrorism, Yucca Mountain on January 6, 2011
Nevada had better watch out, other states like Texas see jobs and revenue in nuclear sites. While it is true that Nevada has the only federal statutory designation as a repository for spent nuclear fuel at Yucca Mountain, Texas now has decided to accept low-level waste from 36 states. Today’s WSJ sets it out well in Texas Welcomes Nuclear Discards.
Strange but Nevada has not seen the money, jobs, industry and research that can come with the current monopoly it has via Yucca Mountain on temporary storage of spent fuel. A group called Nevadans For Carbon Free Energy, http://NV4CFE.org, has developed the concept of an energy park that would provide temporary storage, develop reprocessing and recycling, and eventually grow into power generation. The benefits to the state include jobs, state revenue, and money for the residents along the lines of the Alaska Permanent Fund.
It’s worth serious consideration given the unemployment and budget deficits. Here’s a short video from their website:
Federal-State Downward Spiral is Intractable
Posted by Tom in Centrally Managed Economy, Constitution, Economics, Federalism, Government Regulation, Nevada, State Finances, Taxation on December 8, 2010
In theory, the depression-vintage, federal-state unemployment insurance program was supposed to build reserves in good years so those reserves could be paid out in years of high unemployment. Like other federal government programs it doesn’t work that way.
Randy York called our attention this morning to a Reno Gazette Journal item announcing a 50% increase in the unemployment insurance rates paid by Nevada employers for each employee, $180 on average. On top of that the federal tax will increase by $21 to $77 per average employee; this to cover interest on Nevada’s debt to the federal government with the current balance at $579 million but growing by $300 million in 2011! So Cindy Jones the administrator of the Nevada Employment Security Division argues the necessity, though strangely she is supported by people in the Chamber of Commerce.
Randy analogizes this to “spending our way out of debt,” arguing that the new mantra is that “we can tax our way back to a healthy business environment and lower unemployment.” What are they thinking! Jerry O’Driscoll says the “unemployment benefits have turned into long-term welfare.” Joe Morabito points out that even Denmark cut the benefit duration down to two years and only then did people find work! Indeed, there is a significant amount of economic thought that maintains the unemployment benefits have the unintended effect of extending the duration of unemployment.
The consequences, unintended or otherwise, here in Nevada will be to increase unemployment, close businesses, and frighten California businesses that would have otherwise settled here upon their left coast exits. Note too, this is at a time when Nevada has the highest unemployment rate in the nation.
Now this is only one federal-state tie. There are others in education, medicaid, environment, highways, airports, federal land management, energy, you name it. The relationships involve grants with strings, funding with local tax requirements, joint funding, and unfunded mandates. The major state budget deficits center on medicaid and education both involve federal programs.
I wonder how well off the states would be without all this federal “help?” Missouri, my home state, for instance, has no illegal immigration problem to speak of because the voters designated English as the official language and in another action required law enforcement officers to verify immigration status. Illegals have no mandated access to welfare like food stamps or healthcare. State action. Problem avoided or solved! Now I don’t want to seem flippant, but I wonder how the economy would improve if states took over unemployment insurance and severely limited its scope and duration?
Now consider the federal-state partnership in this downward spiral. That lopsided, unconstitutionally intended relationship is at the heart of the problems. The states have ceded control of problems that they should more appropriately handle. And the federal government has too much control of things it has no business being in in the first place. Our federal system is upside-down and likely to remain so until we restore some sense in the citizenry that we are a republic composed of sovereign state and the citizens thereof, from whence all political power and responsibility derive.
So my take: return election of the senators to the states, preclude federal bailout of spendthrift states, and provide a bankruptcy mechanism for states to legally and politically extricate themselves from their prior unsustainable excesses. Some of them in fact owed to the federal government!
Just a thought!