Nevada depends on hospitality. In fact, the federal government finds that “leisure & hospitality” is the state’s leading industry. But it’s difficult to be welcoming if a state’s roads, bridges, airports, sewers and other systems are wearing out.
Nevada needs to make big investments in infrastructure to keep growing its economy. But right now, there isn’t enough money to fund these needed improvements.
Of course, Nevada isn’t the only state that’s perpetually short of the cash needed to fund infrastructure projects. However, the state’s ability to raise money is, in many ways, even more limited than that of most states; Nevada’s state constitution prevents lotteries, prohibits taxes on certain industries and bans toll roads. So all funding must come out of a general fund, which sources revenue from various other state taxes.
Furthermore, Nevada can’t look to Washington for any immediate help.
Earlier this year, President Donald Trump unveiled an outline for a $1.5 trillion infrastructure spending plan. But, the administration has declined to advance any appropriations bill until mid-2019, at the earliest. Also, the plan envisions only about $200 billion in federal funding. The rest of the money is to come from states and local governments. Nevada, which lacks a dedicated infrastructure revenue stream, may find itself unable to qualify for any federal matching funds.
However, that doesn’t have to be the case.
Just last year, NAIOP teamed up with the Las Vegas Metro Chamber of Commerce and the Regional Transportation Commission of Southern Nevada to encourage state lawmakers to pass AB 399. This measure, commonly known as the “infrastructure bank bill,” created the framework for the Nevada State Infrastructure Bank in order to fund roads, bridges and other projects across the state.
In fact, an infrastructure bank is exactly the kind of state-level “self-help” mechanism the Trump administration envisions. Its plan hints that states should use infrastructure banks, and in a more effective manner, whenever federal funds are appropriated.
Now that Nevada has passed law enabling the creation of infrastructure banks, the next step is, perhaps, the most important. It needs to put in some money to get the bank up and running. A small investment, say $1 million, would be enough to establish a board for the infrastructure bank and get a project underway. After that initial investment, the proverbial log-jam would loosen, and the bank could operate as envisioned.
By way of precedent, there’s a template for the infrastructure bank: the $50 million Silver State Opportunity Fund. Created by the legislature in 2011, the Opportunity Fund was set up to help fund schools by getting a bigger return on the state’s Permanent School Fund. “We are trying to do something that hasn’t been done in this state before,” then State Treasurer Kate Marshall explained. “We are trying to build an ecosystem.”
Nevada’s infrastructure funding problems are real. But they are also, mostly, self-inflicted wounds created by antiquated restrictions on revenue sourcing. Infrastructure banks offer a potential solution that could get projects underway, and help pull federal and private-sector money into the state. Lawmakers were wise to create the bank.
Now, they should discuss how to seed the bank with money, and get it moving on projects.
Rich Tucker is Director for Public Policy Communications at NAIOP, where he develops and executes communication strategies to raise the visibility of NAIOP’s advocacy work on behalf of the industry.