Nevada Gov. Steve Sisolak must not keep up with the local news out of Georgia. Otherwise, he would scrap his “Innovation Zone” proposal to allow private corporations to form their own local governments.
The Atlanta suburb of Sandy Springs has already failed at something similar. Back in 2005, it handed off almost all of its municipal services to one private corporation, everything from its parks department to its court system.
“It is time that local leaders, at the very least, consider innovative ideas for improving … the same old inefficient and unresponsive model for local government services,” Oliver Porter, the architect of the whole experiment, wrote in 2010.
Sandy Springs had just renegotiated its contract with the corporation. “The taxpayers deserve to be provided the most efficient and effective services that can be obtained,” he added.
But in 2019, the experiment came crashing down. Sandy Springs brought all its services in-house due to rising costs, expecting to save the city $14.1 million over five years. The corporation had even fired the public works director without the municipality’s input or knowledge.
This is all to say that a completely privatized town is a recipe for disaster.
By their nature, corporations have a clear interest that doesn’t always align with, nor benefit, the public. They sell things, the more the better. Social responsibility takes a backseat to increasing profits at all costs.
That’s why concerns that the Innovation Zones could drain crucial remote water aquifers are warranted. Sisolak has been transparent that his proposal is aimed at attracting Blockchains, a company that develops cryptocurrency, an extremely energy-intensive technology.
“The most important question to ask about a new city in Nevada is: where’s the water going to come from?” says Patrick Donnelly, the Nevada state director for the nonprofit Center for Biological Diversity.
Imagine a town patrolled entirely by private police employed by a for-profit corporation. Sandy Springs’ meltdown could end up looking like a walk in the park.
If he’s truly worried about Nevada’s economic health, Sisolak should follow proven methods for improving state and local economies.
Like increasing—not decreasing—public spending. After the Great Recession, states that cut spending fared worse economically than those that boosted public investments.
And ending economic development subsidies, like property tax abatements, tax increment financing (TIF) districts, corporate income tax credits, and sales tax exemptions. Most of them are wasted and don’t deliver what they promise.
And raising taxes on households, businesses, and sectors of the economy that have continued to do well during the pandemic and resulting economic crisis. Which is a popular idea. Polling has long shown that a majority believes that upper-income earners pay too little in taxes.
Sisolak is right that Nevada needs innovation to grow its economy beyond casinos and gaming. He’s just completely wrong on how to go about doing it.
Photo by Mario Montelatici.