Over the past month, this news site has hosted a vigorous debate about why companies are increasingly opting to relocate to the similarly low-tax, business-friendly state of Texas instead of Nevada. 

Attorney Brett Sutton argued that Governor Sisolak’s stringent approach to the pandemic and (out of context) comments he made about gaming industry executives portray Nevada as hostile to business. Low taxes and proximity to high-innovation states should be enough to win over corporate leaders looking to reduce costs, Sutton claims.

In response, Dr. Nancy Brune, executive director of the Guinn Center for Policy Priorities, correctly pointed out that companies look at far more than a state’s tax and regulatory environment when making relocation decisions. Far more important, she argues, are public and private investments in technology, research and development, and education. Texas’ advanced innovation ecosystem and highly-skilled workforce are what attract companies to the state.

Dr. Brune is right that improving human capital should be the overarching goal of our economic development policy, but education is only one component of this.

To truly compete with Texas and other low-tax states, it’s critical that Nevada articulates a clear and much more comprehensive economic development strategy. This is especially important as Congress prepares to consider the Biden administration’s recently unveiled $1.9 trillion stimulus plan. Massive investments are expected in areas like infrastructure, human capital, and innovation. As federal dollars are made available to states, Nevada must adopt a broad view of economic development and expand more public goods to our citizens.

Improving our state’s public transit is a crucial component to this strategy. This public good facilitates economic development by lowering travel costs for users, making it easier to access jobs, education, and health care. Numerous studies have shown the social benefits of widely accessible public transit. A 2008 report showed that every dollar invested in public transit generates $3.10 to $3.50 in returns to society. 

Transit providers have voiced concerns that state and federal funding has not kept pace with rising demand and population growth. Better transit can also address equity concerns (something low states struggle with as businesses flood in). A 2019 report by UNR economics researchers found that the areas of Reno-Sparks not served by public transit are populated by lower income and minority groups most likely to use and benefit from it.

Across the country, metro areas coping with an influx of residents are realizing the importance of regional public transit. In November, voters in ten states approved referendums to improve transit in their communities. Residents in Austin, Texas voted to raise almost $8 billion to fund its regional transit master plan.

Housing is another critical public good in need of reform in Nevada. Tech companies fleeing high cost of living won’t find much refuge in the Silver State. Despite the pandemic, housing prices in Southern Nevada soared to new heights. The median housing price in Reno reached $500,000 this month, a new record high. That figure is more than double the median price in 2014 when Tesla announced its relocation to Northern Nevada and the market was considerably more affordable. The lack of affordable options for groups across the income spectrum will deter investment and drive talent elsewhere (just as it did in the Bay Area), while further squeezing lower income residents.

There are other crucial, but much harder to quantity, public goods that Nevada should also focus on. Specifically, a strong civic culture. Successful low tax states attract top talent with communities that have unique and vibrant DNA. One filled with bustling, walkable neighborhoods and nightlife. Areas that have a vibe that can’t be captured elsewhere. We adore Midtown in Reno and the Container district. Those who spearheaded these efforts should be applauded for their vision. But they are not as attractive or explorable (or safe) as Capitol Hill in Seattle, Rainy Street in Austin, or Little Havana in Miami. With time and investment, they can be.

Our state must also focus on creating strong centers of economic activity, places that urban planners called economic clusters. According to Harvard economist and city historian, Ed Glaeser, economic clusters are the key to breeding entrepreneurship, cultivating partnerships within industries, and creating complementing businesses. They also have a positive downstream effect that employs non-technical workers to support white-collar labor while bolstering nonprofits and community events. Strong economic clusters create a self-perpetuating demand for workers, which in effect attracts more employers to that region.

A few examples of these clusters are the burgeoning digital gaming and social media hubs in Austin, the established software ecosystem in Seattle, and the thriving fashion scene in Miami, where clusters of in-state competition brings in revenue and high-skilled labor.

Nevada has certainly made strides in recent years, but still lacks strong economic clusters outside gaming. A lack of a dense network of companies spearheading economic growth in either the north or south of our state hinders our ability to attract business and talent in droves.

Economic clusters also establish an easy entry point for vendors and potential business which ultimately lowers costs for organizations. If businesses in Nevada are still spending time outside our state gaining business and forming key partnerships, a low tax structure is futile.

We need a vigorous debate on why Nevada is losing out to big business. The talent, dedication, and unparalleled sense of community and pride make this an incredible state. The pandemic has motivated many top talent and organizations to consider Nevada home. There is no reason we shouldn’t be at the top of their list.

Wading in on old debates and policy prescriptions won’t work. The conversation over taxes and education is only a small component of growth. In order to go toe-to-toe with the states with established corporate magnets, Nevada must provide an alternative option, not simply follow the playbook of the states they seek to leapfrog.

Until then Texas, along with Florida and Washington, will continue to win. Eli Reilly is a public sector consultant and Shounak Bagchi is a sustainable finance consultant.