Nevada’s construction industry limps along with little optimism
Several dozen union members, trainees, and public officials toured a new building tucked between the railroad tracks and the foothills on the south side of the Truckee River in Storey County.
The structure was built by Laborers’ Union Local 169 as a training facility for construction workers. The idea is that a worker will be able to walk onto a job site and begin work as soon as he or she is briefed on the site itself. Laborers’ President Tony Mayorga said it’s the kind of training that the union used to do at its Reno hall, using limited space and the parking lots.
“I’ve been an instructor for the Laborers for the past 14 years, so we’ve done a lot of classes,” he said. “But now we’re excited because we have more rooms, better classrooms, and bigger areas to train.”
Trainees learn about everything from pipe and concrete work to asbestos and lead abatement to even traffic control and painting stripes on pavement. It also provides safety training required by the Occupational Safety and Health Administration.
The union got a break from deflation on the cost of the facility.
“Actually, it was a very good time if you’re looking at it from the point of a construction consumer,” said Laborers official Richard “Skip” Daly. “Prices were at their most competitive. And that was actually a factor in why we went when we went. We do believe that the economy is going to pick up. We’re betting on ourselves, that Northern Nevada’s going to be fine, and construction’s going to pick up. But we did a very competitive price, which actually probably made the whole loan and everything pencil out and make it possible that we got such a competitive bid.”
“We had the money to go forward and it was the right time because instead of spending $4 million for the facility, we got it done with $2 million,” Mayorga said.
It was hard to overlook the fact that the union now has a facility to train workers for construction that isn’t happening. Tourism and construction have for decades been the economic engines on which Nevada has relied. Tourism is in decline and construction depends on growth. Nevada’s growth has been arrested and, by some counts, reversed.
Nor will state government, often a state’s salvation in hard times, be providing any construction. The Nevada Public Works Board was told on Sept. 15 that Nevada is out of the business of public works for the foreseeable future because the lack of revenue is drying up bonding capacity.
“Based on projections, we do not have the ability to issue any new bonds anytime in the near future,” state budget director Andrew Clinger said.
There had been plans for more than 200 projects that would have totaled $427.9 million.
In fact, the state is in a fairly humiliating situation for a state government—uncertain it can even provide maintenance for the buildings it already has.
“It’s terrible,” said state legislator Debbie Smith, who sits on the Assembly’s budget committee. “Mostly on the health and safety side, we need to make sure we’re taking care of what we have. Just like when you own a home—if you let the home go with no repairs, you pay for it more down the road. But it is also very hurtful to our construction economy.”
And federal stimulus funds are dwindling down, with expected Democratic losses in the November election likely to prevent any more enactment of federal assistance that would benefit the construction industry.
The kind of optimism about the comeback of Nevada’s economy that Daly expressed is not exactly a widespread opinion these days. It’s hard to find anyone who’s not paid to say such things, such as economic development officials, who will say that construction is doing well in the state or that there is much light at the end of the tunnel. The Center for Regional Studies at the University of Nevada, Reno last week released a survey of businesspeople that showed widespread pessimism. Business owners, CEOs and managers in the region were surveyed, and they offered little that was upbeat.
That survey, and other indicators, has shown some unexpected views from surprising places.
“We’ve got to free ourselves of a dependence on gaming and construction,” one businessperson wrote on a UNR survey form.
Debbie Smith said she observed cases of this kind of equivocation at a gathering of the Associated General Contractors where contractors both complained about government interference and overreaching and also complained about government failing to build more.
Some businesspeople are becoming concerned at the idea of U.S. Senate candidate Sharron Angle having an impact on the federal budget—or at her opponent Harry Reid being unable to supply more construction funds. They also worry about candidates for governor Brian Sandoval or Rory Reid being elected while shackled by their own campaign promises. (Harry Reid is exploiting this fear with a campaign commercial that quotes an MGM Mirage executive saying Angle would damage the state’s economy.)
Smith said people in her legislative district, who tend to be fairly conservative, are also expressing some surprising sentiments about taxes. Her district reaches from north Sparks deep into the north valleys like Sun Valley and Lemmon Valley.
“I would suspect my district has as high an unemployment rate as any” she said. “But I have people in my district who are telling me that they’re very worried about our education system if we continue to cut and [about] how we’ll rebuild our economy if we gut our education system. My constituents know that, and I think we need to listen to what people are saying.”
Even businesspeople are talking about a lack of taxes hurting the economy.
“We’re in a position of the lack of tax increases doing real damage to the state’s economy,” said a Las Vegas corporate lobbyist. “When the state doesn’t build, construction workers don’t spend. And it’s not a matter of the private sector taking up the slack when government gets less in taxes. Does this look like the private sector is taking up the slack?”
One state legislator privately criticized both Sandoval and Reid for making promises to the public they haven’t a prayer of keeping. “That’s just going to lead to more cynicism.”
Reno Mayor Robert Cashell, a former chair of the state economic development commission and Republican state chair, agreed and said he hopes Sandoval and Reid will take different positions before the election in order not to break faith with the public when the new governor finally takes a position Cashell considers inevitable.
“I hate to throw myself into the governor’s race,” he said, but then added, “None of them are being realistic about it, I don’t think. … I just do not see any way that they can go without a new tax situation. … I’m hoping that within these next 45 days you’re going to find out which ones are going to be up front and straight away with the people. … I don’t think they’re facing facts or being very honest. There’s no way—you could close every university and community college in the state. Wouldn’t balance the budget.”
Meanwhile, a slight glimmer of light appeared between the positions of Sandoval and Reid on the issue of tax increases. Up to now, both have said they would oppose tax hikes as governor. Sandoval had said he would veto any hikes while Reid was silent on vetoes. But during an interview with Benjamin Spillman of the Las Vegas Sun on the same day as the public works meeting, Reid was asked if “it would be accurate to report that” he would go along with tax and fee increases initiated by the legislature. He replied, “It would.”
But by saying he would leave the initiative to the legislature but not lead on the issue himself, Reid undercut his previous criticism of Sandoval for a lack of leadership.
Then over the weekend, Reid backed away from saying he would sign any tax hike, so things were back where they started.