Nevada fishes for new business

Authority representatives stationed themselves outside the Capitol building in Sacramento, Calif., on Tax Day, handing out 1,000 bags of Gummy Bears and promotional materials to passers-by. The idea: to remind California business owners as they shelled out state corporate and personal income taxes Tuesday that they’d be free of such levies if they relocated to the Silver State.

It’s the latest initiative in a 2-month-old advertising campaign that will eventually deploy 40 advertisements featuring cartoon versions of the grizzly bear on the Golden State’s flag.

Authority officials bought full-page ads in the business section of the Sacramento Bee on Monday and Tuesday to accompany their visit.

It’s not the authority’s first foray into Sacramento. The group made a similar trip in March 2006 as part of a prior marketing assault. But things are different this time, said Somer Hollingsworth, the authority’s president and chief executive officer.

“The California economy is in worse shape than it was the last time we were here,” Hollingsworth said. “The state, the individual cities, they’re upside down by billions and billions of dollars on employees’ health insurance and retirement benefits. There’s a $16.5 billion deficit. The numbers become so gigantic that you look at them and say, ‘There’s just no way this is going to work.'”

The authority’s marketing effort has already caught the eye of California officials and media.

California Sen. George Runner, R-Lancaster, flashed the group’s newest ads during a hearing of the state Legislature’s Revenue and Taxation Committee earlier this year to show how California’s tax policy is encouraging poaching from economic developers in other states.

The Los Angeles Times wrote an article on the controversy, noting that the ads touched “nerves on both sides of the tax-hike issue.”

Versions of the Times story also appeared in the Chicago Tribune and the Orlando Sentinel.

“Unfortunately, this Legislature is asking for these types of advertisements,” Runner told the Times.

The authority garnered additional attention with its promotional blitz Tuesday in Sacramento, where the authority had a team of street performers handing out the Gummy Bears, T-shirts and fliers listing “Sweet 16” reasons to move to Nevada.

The purpose isn’t merely educational, though. Authority officials hope to rustle up additional looks from the media.

“We want to get as close as we can to the source and see if we can’t get some more press out of it,” Hollingsworth said. “And you can’t get much closer for publicity than on the sidewalk in front of the governor’s office.”

Hollingsworth estimated he did interviews with five or so media outlets Tuesday.

Barbara Hayes heard one of those interviews on the radio in the morning as she was out of her Sacramento office on business.

“It was a pithy little interview,” said Hayes, executive director of the Sacramento Area Commerce and Trade Organization. “I don’t think it’s anything that’s going to cause anybody to pick up a company and move. Companies make decisions based on facts, numbers and evaluative criteria. If this gets someone thinking, then mission accomplished. But as far as resources being used, to be in front of the Capitol or on morning radio, I’m not sure it’s going to reward them in the way they want.”

Most of the foot traffic outside the Capitol comes from school field trips, tourists and legislators — not demographic groups who are exactly poised to move a business, she said.

Hayes acknowledged that Runner’s comments before the California Legislature made a point. She said she hoped Runner’s arguments served as “a wake-up call” regarding California’s tax rates and business costs. But she added that higher taxes in the Golden State “aren’t even on the table for discussion right now.”

Plus, the quality of work force is the biggest driver of corporate-relocation decisions, she said, and in that area, California handily beats most states.

Allan Zaremberg, president and chief executive officer of the California Chamber of Commerce, agreed that business owners consider factors beyond taxes when they’re deciding where to locate a company.

“Our access to ports, a vastly superior work force, a tremendous system of higher education and a great quality of life keep us competitive,” Zaremberg said. “As well, California has a substantially larger and wealthier consumer base market than other states.”

Even as the authority takes a magnifying glass to California’s flaws, Nevada is yielding its own share of troubling headlines.

A local endoscopy clinic forced the largest-ever public notification of patients who might have been exposed to hepatitis C after health investigators witnessed improper injection practices there.

What’s more, several petitions to raise gaming taxes are circulating, and some casino operators have responded to the ballot questions with renewed calls for a broad-based corporate-income tax.

Hollingsworth said neither issue has yet proved a deal-breaker for prospective new companies.

No companies working with the authority to move to Las Vegas have asked him about the hepatitis alert, he said, and Nevada is far from the only state scrambling for revenue. And in its $900 million difference between state budget and income, Nevada pales in comparison to California, he noted.

“Every state is looking at taxes and what they should or shouldn’t do, and how they can still be business-friendly,” Hollingsworth said. “It is something we have to answer. We tell people our problems are no different from anyone else’s, but we’ve got this really good, business-friendly structure in place, and we’re doing what we can to keep it.”

The authority has placed nearly 10 of its bear cartoon ads. It’s drawn up 40 spots and will spend about $1.5 million in the next few months to place the ads and coordinate related events in the next few months.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.