George Rebane

Small counties across the state are going through hard times.  Nevada County is both blessed by its geographic location and burdened by its political location.  In today’s WSJ California Congressman Devin Nunes writes in ‘California’s Gold Rush has been Reversed’ (this link will be open to non-subscribers tomorrow) that “entrepreneurs are fleeing heavy taxes in the state”, and goes on to say

After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. This exodus is the marker of something deeper than a national recession. It’s a sign that the attempts by state leaders to spend their way back to prosperity are killing California.

Today the annual net outflow of Californians is north of 135,000 a year.  And these are not only chicken farmers frustrated with the state’s new large cage regulations; these are the people who start small and high-tech businesses from which grow national icons employing thousands.  To this Nunes says

Consequently, Idaho, Utah and Wyoming all have unemployment rates around 5% at a time when California is suffering an unemployment rate of 9%. Californians are moving east and creating jobs in their new home states.

Over the past few years, we’ve witnessed the state government’s response to the capital and entrepreneur flight out of our state: Taxes remain high, and lawmakers employ all the tricks in the book to produce “balanced” budgets from shifting expenses around to borrowing ever larger sums of money.

And the malfeasance in Sacramento directly impacts Nevada County which last November declared its switch from historically conservative to a newly minted liberal county – our Peters have petered out and the Pauls are taking over (see Peter-Paul Principle).

Economic Development season is coming back into vogue locally, new business development issues are on our minds as county businesses are shutting down and/or moving, and new start-ups continue being put through the wringer (see piece on NC Media watch about the Idaho-Maryland Mine).

Without much amplification, the following summarize my thoughts about Nevada County economic development.

1. The exit of manufacturing enterprises will accelerate due to our location and the recession.  It is hard to justify what value can be added here in the mountains to stuff that has to be hauled here from densely populated, easy business and distribution centers, and then hauled back out again to the same place.

2. High-tech firms employing engineers and technicians will now look elsewhere to escape high taxes and satisfy staffing needs.  Engineers are very specialized people who very seldom can jump from being an analog chip designer to developing DNA analysis software.  It is a risk for an engineer to bring his/her family to the Grass Valley/Nevada City area.  Companies here would benefit from new residential developments in south county where new employees would also be within easy commuting distance from the I-80 corridor.  But such developments would run into a gauntlet of buzz saws all ready and waiting.

3. The two natural economic pillars of our county are tourism/hospitality and the leisure/retireds.  Both have been under-recognized as major cash importers to the county that can keep our service, retail, arts, etc enterprises going.  The prime inhibitor to supporting and building these commercial activities continues to be the, to me, insane determination to force western Nevada County to remain as a so-called ‘balanced community’.  As connected as we are to a major metropolitan area, this goal is practical impossibility and its pursuit economically unsustainable.

4. Nevada County needs to adopt economic growth objectives that specialize or play to its unquestionable and enduring strengths.  A socially engineered ‘balanced community’ can only be forced into being with massive and continuing sources of imported cash (from where??).  However, building on the county’s natural economic pillars will readily attract other profitable information-based small businesses as the county’s broadband and transportation infrastructure continues to grow.  For economic development we have to build on and from our strengths.

[11jan09 update – More on this theme in guest post on NC Media Watch.]