Optimism is in the air as 2016 ramps up and that positivity is making its way through Nevada’s business community as executives and business owners continue to see improvements. The year started with some big announcements for economic diversification in the state, including projects moving into Southern Nevada’s Apex and continued optimism in the north with new businesses moving to the area and expansions for companies in a variety of industries. Those bright spots have led the state to a resurgent economy and the ripple effect has been felt by executives across the board.
With growth happening in several industries, the state’s tourism numbers increasing and people looking to Nevada as a great place to live and work, the state’s recession seems further away than it has in recent years. In addition, Nevada has long been known as a mecca for business and, as economic development leaders work to bring people and business to the state, it’s not hard to get them to stay once they’re here.
“When I first moved here in 1998, the person who brought me out here said that Las Vegas, in particular, is a hard place to move to but it’s an even harder place to move from,” said Robert Rudloff, senior vice president of internal audit for MGM Resorts International. “From the different offerings that we have, I find it a great place to live.”
The Power Poll, which is an annual feature for Nevada Business Magazine, highlights the thoughts of business owners and executives on a variety of topics from the economy to social issues. This is the fourteenth year for the poll which was sent to a select group of participants, some of whom were asked to comment on those topics. While not a scientific poll, the Power Poll series has, in the past, been a good indicator for business in the state. With a mix of executives from different industries and locations weighing in, the poll represents the mind-set of business leaders in Nevada.
Sent out at the beginning of this year, Power Poll asked decision makers to answer a series of questions which were specifically designed to give readers a gauge of what Nevada executives and business owners think about the social and economic landscape in the state and in the nation. In addition, some of the questions were forward thinking, asking executives to predict where they think the state might be headed. Garnering hundreds of responses, this year’s poll was specifically marked with optimism and hope. The poll is featured in the following pages along with previous year’s polls for comparison.
The 2016 poll was similar to previous years as far as who responded with a nearly even split between business owners and executives with the latter comprising 52 percent of respondents. Most respondents are long-time Nevadans with 57 percent of those polled doing business here for over 20 years and over 80 percent for over 10 years.
It’s Looking Up
As previously mentioned, this year’s poll indicated increased optimism for both business and Nevada’s economy as a whole. “We’re busier than we were last year, probably in all facets,” said Brian Sorrentino, director of ROI Commercial Real Estate. “It’s not what it was, which is probably a good thing. There’s more user-driven development, that’s good. With my business being retail, it’s very active.”
When asked how their businesses were doing when compared to last year, nearly 70 percent of executives said that their business was doing better or much better. Additionally, a whopping 85 percent said they expect their business to continue to improve into the next year.
Mark Andrews who serves as chief marketing officer for Clark County Credit Union echoed those sentiments. He said, “Our numbers show us that we’re doing well and it looks like most of the economy is also. We feel like last year was a good growth year and we’re picking up and doing some of the same things this year. We feel it’s a healthier climate than it was two years ago, that’s for sure.”
“I bet we have 30 to 50 percent growth,” added Wanda Shumar, senior vice president for Bank of George. “I really see things doing that much better this year to next year. It’s been absolutely amazing.”
That’s not to say that every industry is seeing growth. Some industries tend to lag behind and others may experience a reverse effect during recession and growth cycles. For example, mining, while still a strong industry for the state, has not seen the growth that it had in recent years.
“The mining industry as a whole is in a bit of a downturn right now,” said Dana Bennett who serves as president for the Nevada Mining Association. “Commodity prices have dropped by quite a large percentage. Compared to last year, we’re down a little bit.”
As far as the Nevada economy in general, executives are confident about the Silver State’s future. Eighty-two percent of those surveyed felt that Nevada’s economy was doing better than in previous years and 85 percent said they expect the state to continue to improve.
“It feels like we’re certainly headed in the right direction and catching up to the rest of the country,” said Jason Bruckman, regional vice president for Eastridge Workforce Solutions. “Where it took us a little while to catch up on a national scale, it feels like we’re finally there. It’s been great over the last year and I expect it to continue to grow.”
Dr. Anthony Slonim, president and CEO for Renown Health in Northern Nevada added, “You can feel, it’s palpable, that people have an optimism from overcoming such obstacles in the past couple of years that we’ve been able to overcome.”
“Nevada has improved but it’s been a very long and difficult struggle,” said Andrew Brignone, a shareholder with Brownstein Hyatt Farber Schreck. “Nevada, especially on the real estate front, went from the top to the bottom almost immediately in terms of job losses, foreclosures and people leaving the state. It was both frightening and difficult to deal with.”
Bryce Clutts, president of DC Building Group knows that struggle all too well and, for his industry especially, is excited about how far Nevada has come. “I’m bullish on Las Vegas and Nevada right now,” he said. “In general, we’re going to be better a year from now than we are right now, both in our business and as a state. I feel good about where we are.”
Putting action to words, executives this year have indicated an increased need for staff and worked to fill that need for their companies. In fact, some are even struggling to find the talent in state and find themselves recruiting from other areas.
“It’s been difficult to find the talent that we need,” said Rudloff. “There’s been mixed stories, over the years, about what it’s like to live here, what our economy is doing, healthcare, the school system and those things. Sometimes that makes it harder for someone to relocate here.”
That’s certainly an issue that will need to be addressed, and soon, as 57 percent of those polled indicated that they’ve increased staff in the last year. Another 63 percent expect to see increases into 2017.
“We’re seeing staffing across the board go up,” said Bruckman, who is in the staffing industry. “We’re seeing that growth occur across the board with our clients because of the fact that they’re incredibly busy. They’re adding on new positions and new lines from the manufacturing side. We’re seeing a really strong uptick, both internally from a staffing perspective, and with our clients externally.”
While some business owners and executives are challenged in finding professional-level applicants, the state has a multitude of entry-level applicants seeking jobs, many of whom start at minimum wage. A hot-button issue in Nevada, this year’s poll asked executives, for the second time, if they would support an increase to the state’s minimum wage. In both year’s polls, over sixty percent of executives have said they would not support a minimum wage increase with a slight uptick in this year’s number. However, the issue is divisive for the Silver State with 36 percent of executives in favor of the increase. “You need to make enough money to at least be able to live,” said Shumar.
“Minimum wages are too politicized and they’re not understood, especially on their economic impact,” said Brignone. “I’m much more favorably disposed to improving training and education so that people can grow out of minimum wage jobs into higher paying jobs. You lose a lot of jobs when you impose a minimum wage.”
Clutts added, “I believe the free enterprise system will work itself out. I don’t think that should be mandated by law.”
Unions are another issue that have traditionally had a wide-spectrum of viewpoints in Nevada. This year’s poll, as have previous, asked executives if they think unions are necessary to the state’s workforce. Of those polled, only 25 percent would either somewhat or strongly agree that they are necessary.
Render Unto Caesar…
It has been said that only death and taxes are certainties and, in the Silver State, that phrase holds new meaning for some executives after the passage of SB 483, the state’s most comprehensive tax increase to date. To gauge the thoughts of executives on the bill, the poll asked if they were concerned about the recent change to Nevada’s business tax structure. Nearly 88 percent said they were somewhat or very concerned about the bill.
“That was a great point of debate in the last legislature,” said Andrews. “I realize that some of the legislators tried to put some language into the measure to at least soften the blow to smaller businesses. I understand the pressure from the community, government and state services looking for revenue the way they were. Either taxes are good for us or taxes are not good for us. If they are good for us then we should not have waived them for Tesla and Faraday. If they’re not good for us, then we should waive them for everybody.”
“It’s very concerning,” added Sorrentino. “It goes back to taxing small business and entrepreneurs, you’re barking up the wrong tree there. That’s the biggest job-creator we have. If you start damaging them, it’s going to really put a big hurt on the economy.”
As in previous years, this year’s poll asked again if executives felt that the mining and gaming industries, often recognized as two of the largest in the state, pay their fair share of taxes. Opinions are split with 66 percent saying gaming pays its fair share and 49 percent saying mining pays its fair share.
“The state has relied on these two industries more than any other industry,” said Bennett. “We have advocated for many years that Nevada needs a broad-based approach to taxation and not be reliant on any one industry. We pay four times more than any other industry in terms of tax burden per employee.”
In general, Nevada executives felt that business in the state have too much of a tax burden with 64 percent agreeing either somewhat or strongly on the issue. However, whatever the tax issue, Nevadan’s for the most part agree that a state income tax should not be on the table. An overwhelming 91 percent of respondents said they would not support a state income tax, a majority that has been maintained since the question was first asked in 2009. In fact, since that time, the number has not fallen below 80 percent.
Regardless of the current tax climate, Nevadans also overwhelmingly agree that the Silver State is good for business. In fact, only 10 percent of those polled would rate the state unfavorably when it comes to business friendliness.
“By virtue of all the gearing up we’re doing to help support businesses that come here and incentives and any number of things, it seems as though, at the moment, there’s almost an all hands on deck to recruit new businesses,” Slonim said. “That’s good; that will help our economy.”
“It’s very easy to do business here,” added Bruckman. “We do business on a national scale where it’s tougher. It’s very easy to do business in Nevada and [that’s] a big reason why companies are moving here.”
Seeking a Better Grade
Nevada’s education system, which is vital to the development of the state, has seen several struggles over the years. In fact, only 6 percent of those that participated in the survey would give the state’s system above a ‘C’ letter grade and 61 percent would say it’s below average.
“It’s clear from a number of external benchmarks that our educational system could be improved,” said Slonim. “We certainly rely on the education system, as will other companies, to create our workforce.”
Executives are optimistic for the future of education, however. Bennett added that there, “are a lot of good parts to Nevada’s educational system. Nevada really does produce some well educated folks. I’m one of them, the governor is one of them. Like any system it has some areas that need some work and we are really optimistic.”
When asked what was needed to fix the system and bring about that improvement, many agreed that it wasn’t any one thing that was need but, rather, a combination of several. When ranked, parental involvement was marked as most important and accountability received the highest percentage as second most important.
“It all starts with parental involvement,” said Rudloff. “Too much is being expected of the teachers. Parental involvement doesn’t mean going to PTA meetings. It doesn’t mean standing on the sidelines at sporting events. It’s taking care of the learning process at home so the child is ready to go to school. I don’t think parents have an appreciation of what their true responsibility is to the educational system.”
“You can ask for it, beg for it, plead for it, but you can’t force it,” added Andrews.
Apart from education, the Silver State, along with the nation in some cases, has seen significant changes to societal issues in recent years. In particular the Affordable Care Act (ACA), commonly referred to as ObamaCare, has had a huge impact on healthcare. The question is whether that impact has been positive or negative. Either way, of the executives surveyed, 66 percent indicated they were concerned about the ACA.
“I’m concerned about it’s negative consequences,” said Brignone. “I don’t call it the Affordable Care Act because I’d be lying by calling it ‘affordable’. I call it ObamaCare. It has some good features to it but the negative implications outweigh the positive. The one-size fits all model of ObamaCare is not well suited to diverse circumstances.”
Slonim, who oversees one of the largest hospital systems in Northern Nevada, added, “We’re somewhat concerned. ACA has been implemented and, as an industry, we’ve been in transition now for the last five years.” He added that one of the positives of the ACA is that it has helped advance the dialogue on healthcare coverage. “It’s not perfect but it’s certainly moved the ball beyond where we were before,” he said.
With the recent legalization of marijuana for medical use in the state, Nevadans have begun to see dispensaries pop up everywhere and a new industry is blooming, literally. However, many executives don’t feel that the legalization should extend to recreational use of the drug, although that margin may be smaller than expected. Only 56 percent of executives said “no” to allowing recreational use of marijuana.
“I believe in it for medical use,” said Shumar. “Part of me wants to say I support it [for recreational use], from a financial side. Let’s go ahead and tax it and make money on it. But, then you have to look at the other side and the people that use it irresponsibility. Look ten years out; how’s that going to change society as a whole?”
“Personally, I don’t believe the legalization of it in any way benefits our business community, society or educational system,” said Clutts.
A State of Disquiet
While the state has certainly seen a number of changes, many of Nevada’s issues of concern have remained the same. For the past several years, the Power Poll has asked executives to rank six concerns Nevadan’s have traditionally had for their state. This year, as it has previously, the quality of education in Nevada topped the list. Transportation, while still not a huge concern for executives, has seen increasing numbers this year. Some executives speculate that may be because of how essential efficient transportation has become to the growth of the Silver State.
“Nevada moves a lot of people and a lot of goods and we have a very small interstate/highway system and an antiquated intra-state highway system,” said Bennett. “When you look at how big Nevada is, it should be easier to get around the state.”
Sorrentino agreed saying, “If we want to continue to grow our economy, our two biggest metro areas are not easy to get to from natural business conduits. One [conduit] is Southern California and the other is Arizona, they’re both hard to get to. If we can address those issues, it will improve business and our economy dramatically.”
The poll also asked executives to rank how concerned they are about the government’s involvement in a variety of areas. In regards to government overreach, there’s certainly a level of concern among those weighing in.
“A lot of the overreach has come because the legislative bodies have abdicated their responsibilities and instead transferred rule making and fee setting to the executive units,” said Andrews. “Being set free by the legislative bodies to set their own agenda and promulgate rules means they’ve gone right ahead and done that. As a result, we end up with a heavy burden of compliance.”
“I am concerned about it,” said Brignone. “What concerns me is, and you see a lot of this coming out of the Obama administration, the regulation of American business. You can’t have unbridled capitalism, you have to have a regulated capitalist system. Some of the things really go beyond the point of what’s reasonable and necessary and become stifling.”
Sorrentino added, “I’m fiscally conservative and the government, in my opinion, never does well when it gets involved in business. There isn’t a successful government business around.”
The Political Year
This year’s political landscape, which will feature a presidential election, is at the top of mind for many Nevadans, particularly for Nevada decision makers. A number of important positions are open and will be decided in November. The poll asked executives to grade politicians based on the job they’re doing for Nevada.
While he is in his last year of office, President Barack Obama fared poorly in this year’s poll with a grade of ‘D’. In fact, President Obama hasn’t averaged higher than that for the length of his term. When asked why, executives felt that he didn’t do the job he should have, particularly when it comes to Nevada.
“He would be an ‘F’ given the fact that he exacerbated our recession by telling people not to come to Las Vegas, twice,” said Sorrentino. “We lost 220 conventions. I’m not a fan of what he’s done for our state.”
Governor Sandoval, on the other hand, fared well in this year’s poll with a solid ‘B’ which is above average. Shumar said of Governor Sandoval, “He has made a definite positive name for this state. I would give him an ‘A+’, actually.”
The rest of the state’s administrators featured on the list received average marks. Their grades ranged from ‘C’s’ for both Secretary Barbara Cegavske and Attorney General Adam Laxalt to a ‘C+’ for Lieutenant Governor Mark Hutchison. Nevada’s representatives also came in fairly average and with consistent grades to previous years. Senator Harry Reid ranked lowest with a ‘D+’ and Representative Dr. Joe Heck ranked highest with a ‘B-’.
This year’s poll, while garnering few surprises from executives, has simply illustrated both the state of flux Nevada is in as well as Nevadan’s hope for a bright future. While the elections will have a significant impact on the Battle Born state, it’s too soon to tell what that impact will be. Regardless, since surviving the toughest recession in recent memory and certainly one of the toughest in the nation, Nevada executives are leaner and better prepared than ever for whatever may come.