Officials find Nevada ads ‘un-Bear-able’
As California business leaders bristle at vows by lawmakers to close the budget gap with new corporate taxes, the good people of Nevada see a Golden State opportunity.
In a series of advertisements in newspapers and business journals that portray California in cartoons, the Nevada Development Authority is trying to lure California enterprises across the state line.
“Doing your part to carry the un-Bear-able load?” asks one ad, which features a cartoon of a businessman lugging the bear from California’s state flag on his back. The bear has a fistful of cash in its mouth and, just to be clear, the words “California Taxes” on its left hind leg.
“We can see what is going on in California as far as businesses are concerned,” Somer Hollingsworth, president of the authority, which is seeking to attract companies to the Las Vegas area, said in an interview. “They’ve got workers’ comp issues, a $16.5-billion deficit, employee retirement funds that are out of whack.”
Now many in Sacramento “want to raise billions of dollars in taxes,” Hollingsworth said, “and the only people left to pay them are businesses.”
The ads crow that Nevada, long a haven for businesses seeking refuge from taxes, has no corporate income tax, no personal income tax and no inventory tax -- plus, it has lower workers’ compensation rates and a pro-business attitude.
Hollingsworth says he wants to “let businesses know there is an alternative” to California. “We want to pull some companies out of there.”
The move by Nevada officials, who say they will spend about $1.5 million placing the ads in publications and on billboards, has been met with some annoyance among California lawmakers.
“Businesses are here because they appreciate the powers of this economy,” said state Sen. Mark Ridley-Thomas (D-Los Angeles), who is among the Democrats arguing for a tax hike. “I suspect Nevada wishes it could be ranked as among one of the top economies in the world.”
Ridley-Thomas said the Nevadans would be “naive” to think they would benefit from California’s budget problems. What they really ought to be doing, he declared, is rooting for a recovery in California, because growth here tends to spill over the state line.
Meanwhile, the anti-tax crowd in Sacramento has seized on the Nevada campaign as one more reason not to increase taxes. Sen. George Runner (R-Lancaster) waved a copy of one of the ads at a recent hearing of the Revenue and Taxation Committee to emphasize his point that state taxes are already too high.
“Unfortunately, this Legislature is asking for these types of advertisements,” Runner said in an interview. Nevada officials “wouldn’t be placing them if they didn’t think they would be successful in luring businesses away from here.”
The campaign includes at least seven ads, most labeled “More Tales of the California Tax Bear . . . “ In one, the bear has a leash around a businessman’s neck and orders him to “keep dancing.” In another, the animal is greedily devouring a pot of honey labeled “profits.”
One of the ads doesn’t include the bear at all, but instead takes direct aim at the state’s movie-star governor. A giant hand snatches the wallet out of a businessman’s pocket; under the quote: “I’ll be back!”
It wasn’t long ago that Gov. Arnold Schwarzenegger was promising Nevadans that he would be back. He went there in 2004 to lure businesses to California. He made a production of driving a movers’ truck, with a giant photo of himself on the side, down the Las Vegas strip. He declared at a subsequent news conference: “California is open for business.” Billboards saying as much were posted all over the country.
Schwarzenegger arrived in the same truck at the new home of a small sign-printing company that had fled Nevada for La Verne to help unpack its boxes.
The state spent $600,000 on the “open for business” campaign, which was never renewed. Runner said that campaign was “more hype than reality” and that the business climate had not improved under the governor’s leadership, a claim Schwarzenegger strongly disputes.
The Public Policy Institute of California last year released a report that said California’s relatively high tax burden and intense regulatory environment had not sparked an exodus of businesses from the state. It found that 11,000 jobs per year were relocating outside of California, fewer than the number of jobs being created in a state with more than 18 million jobs.
Schwarzenegger administration officials say other states can’t compete with California, which has an economy roughly the size of Italy’s. They say policies championed by Schwarzenegger, including state support for stem-cell and alternative-fuel research, have made California increasingly attractive to corporations.
“California is the best place in the world to do business,” said Schwarzenegger spokesman Aaron McLear. “It has a governor who understands what is necessary for success.”
McLear also points to the state’s new law limiting greenhouse gas emissions, which the governor says has led to a boom in businesses that develop clean technology. But there is no guarantee those companies will stay in California.
Consider the Palo Alto solar-panel firm Ausra Inc. Its new factory will produce panels for a giant solar farm in San Luis Obispo County that will generate enough energy to light 132,000 California homes. But the factory isn’t in California. It’s just outside Las Vegas.
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To view the Nevada advertisements, go to www.latimes.com/nevadaads
