Viewing blog posts written by Gino DiCaro

California & Nevada: Financial crisis and sleep aids

Posted by Gino DiCaro, VP, Communications on Oct. 8, 2008

This week, Californians have heard that the leading economic indicator -- the national stock market -- has slid to under 10,000 for the first time since 2004 ... that a national $700 billion rescue package paid for by U.S. taxpayers might or might not work to bring the nation's heavily depended upon credit market back to something better than it is now (I digress for an anecdote: my colleague told me yesterday that his friend with an 800 credit score and $15,000 down on a $35,000 car couldn't even get an auto loan last week) ... that national manufacturing employment took the hardest hit last month -- 51,000 jobs -- in across-the-board overall employment losses (stay tuned for California's September employment numbers here) ... that the State's own Unemployment Insurance Fund will be out of cash in February .... that California's overall Budget deficit is now much worse than previously admitted ... that California might have no where else to turn for money after October 29 ... and that our only refuge from real life -- sports institutions -- will also feel the economic pinch.  OK, now I'm worried.

During this national and state economic crisis, and perpetual 2:00 am 401K retirement angst, I suspect sales are still increasing for at least one product -- sleep aids.  But one little item I saw this week brought comfort and firmly bolstered my trust in free market capitalism.  That morsel was the announcement that the Nevada Secretary of State is getting ready to launch an economic development package and website titled "Why Nevada".  I know, run to the presses.   It's never been done before!  This is just crazy!   It IS important however, because of the litany of low tax climate incentives being used to recruit manufacturing and other industries when everyone else is looking to find immediate State and Federal revenues with taxes, rescue packages, loans, etc.  Nevada understands they need to build an attractive and competitive market for the biggest revenue augmenter in the world -- a well paid job base -- and they know that competitive accommodations matter more, now.  The "Low Tax Climate" items listed on the new site include:

    * No Business Income Tax
    * Income Tax is Prohibited
    * No Estate Tax
    * No Franchise Tax
    * No Gift Tax
    * No Inventory Tax
    * No Tax on Corporate Shares
    * Property Tax Increases are Limited

Cost implications always matter for manufacturing and other employers, but as entire consumer markets seek less product for less money and governments covet more money from fewer sources, most employers will absolutely require less expensive zip codes for the genesis and production of their products.  My bet is that relief from the economic depression will come quicker to Nevada and perhaps other state's that foster large campaigns to dynamically improve their job base and, as a result, increase economic activity and gain more private and public revenue ... even if it means foregoing a few immediate revenues.

As California's own legislature and Governor contemplate Constitutional Conventions, special Legislative sessions, a possible budget re-do, unconventional loans, etc. they should look to Nevada for ideas for their very own "sleep aid" and discuss very seriously and quickly a major campaign with real cost reduction policies to retain and recruit what we need most.

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