Nevada's economy dead last - News

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Oct. 08, 2008
Copyright © Las Vegas Review-Journal

Nevada's economy dead last

Decline since January '07 worst in nation

By ED VOGEL
REVIEW-JOURNAL CAPITAL BUREAU

ON THE WEB
The Rockefeller Institute of Government

A "closed" sign hangs Tuesday on the door of the Just Write store in Las Vegas. A report released Tuesday says Nevada has been hit harder by the nation's economic downturn than any other state.
Photo by John Locher.

CARSON CITY -- Nevada's economy has declined more than that of any other state since January 2007 and could get even worse as the national economic downturn becomes more severe, a report released Tuesday indicates.

The damage is just beginning for state government budgets, with further tax and payroll declines expected in coming months, according to the report by the Rockefeller Institute of Government.

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"The last fiscal crisis for the states, which occurred in the midst of a mild recession, was dubbed the perfect storm. This one could be more perfect," co-author Donald Boyd said in the report, referring to the aftermath of the Sept. 11, 2001, terrorist attacks.

As if Nevadans intuitively did not already know, the Rockefeller Institute, a policy research organization at the State University of New York in Albany, found Nevada has been hit harder by the downturn than any other state.

According to the Federal Reserve Bank of Philadelphia, Nevada's economic activity index in August was 95.8, based on a January 2007 benchmark of 100, making it the worst in the nation.

Nevada's index also dropped further than any other state's between May and August, with its economic activity falling 2.1 percent.

Economic activity is a measurement that includes tax revenue changes as well as the unemployment rate, real wage and salary distributions, average weekly hours worked, labor market and payroll information.

Under that measurement, Texas is the best-off state with a 106.1 economic activity measurement, while West Virginia has performed best since May, gaining 2.2 percent.

California, which may need a $7 billion federal bailout to balance its budget, ranked 21st in economic activity with a 101.4 measurement.

Since May, 39 states have shown declines in economic activity, led by the 2.2 percent drop in Nevada.

Nevada's unemployment rate climbed to 7.1 percent in August, far above the national 6.1 percent average. It also is the highest unemployment rate in 23 years.

Last week, Nevada economists predicted unemployment would increase even more, to an 8.6 percent average rate in 2009 and 2010.

Gov. Jim Gibbons and the state Legislature have cut state spending by $1.2 billion because of declining tax revenues.

Gibbons warned legislators they might have to cut another 14 percent when they go into session in February.

The governor's communications director, Ben Kieckhefer, said Tuesday the study bears out what is becoming very apparent in Nevada.

"The inability of businesses and individuals to access capital has taken a serious toll on economic activity," he said. "People can't get loans to buy homes, and businesses cannot expand their businesses. This credit crunch is having a very serious effect on Nevada."

Assembly Speaker Barbara Buckley, D-Las Vegas, said Monday that because of further tax revenue declines, the state's budget cuts may approach 20 percent.

Buckley is holding a series of town hall meetings asking people for suggestions on what to do.

She also favors re-examining the tax abatements and exemptions that the state has granted some businesses over the years and setting priorities next year on where funds should be spent.

During a meeting Monday in Reno, several Nevadans said the Legislature should increase taxes on gold as a way to prevent further state cuts. Gold sold for $883 an ounce Tuesday, up $20 from Monday.

More than two-thirds of the gold in the United States is mined in Nevada. Gibbons, a former mining geologist, vowed in the spring to veto any bill that calls for increased mining taxes.

The Rockefeller Institute study shows the economy will be worse.

Boyd said "three more shoes have yet to drop."

He explained that states are yet to feel the full effect of the financial sector meltdown, the stock market decline and further losses in employment because of the credit crunch.

The report indicates that Nevada, Florida, Arizona and Michigan have suffered steep declines in housing prices and that Michigan also suffers from long-term economic weakness.

"Nevada looks very much like Arizona and Florida. It benefited from the same sort of real estate run-up, and suffered a very similar sharp decline in state tax revenue. Michigan by contrast has suffered a long-term economic malaise," the study said.

The situation in the states only will get worse in 2009, according to the study.

"The final quarter of the fiscal year -- the April through June quarter -- is likely to be very, very bad, reflecting declines in investment income and compensation to high-income individuals," it predicts.

Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. cheese wrote on April 29, 2009 11:54 AM: hulk says hi Joey wrote on April 29, 2009 11:49 AM: hi hi hi hi hi hi hi hi hi hi hi Craig Simpson wrote on October 12, 2008 12:35 AM: McCain voted to deregulate America's financial infrastructure and this caused the recent melt down of the global financial system. And this guy wants to be President.....I DON'T THINK SO! Thanks McCain when you lose your job and your house! Stand up America! We cant afford another 4 years of McBush! ObamaNation wrote on October 10, 2008 12:04 PM: Ha ha ok now, folks, sit down, take a long toke on that Maryjane and relax! Comfy now? Good! Now ask yourselfs, do you really think America will vote for a leftist radical street hustler from Chicago who is also a N@@Ger? Nah, I didnt think so! Julia wrote on October 09, 2008 02:02 PM: Do you all not realize that when Clinton was in office congress was almost all Republican and economy looked good because republican congress presented bills to Clinton and he signed off on them making Clinton look good as a president. With Bush in office congress is almost all demicrats. And the bills being presented to Bush are retarded and Bush rejects them and because of that Bush looks bad. Do you all not realize that Congress are the ones who write the bills and then it goes to the president for him to Veto or not? Republicans need to be put back in congress to get this country back on it's feet!!!! You all want change...then get out there and Vote!! Vote smart and vote because you know what you are talking about not because of color or age...Vote because you need to! Edward L wrote on October 09, 2008 12:48 AM: How about getting rid of the Henderson cops donut mobiles? Those Tahoes that sit around all day at school zones looking to make money nabbing someone 5 miles over the speed limit. 300 cops, nothing to do. Motors running in their 15 mpg guzzlers. The only hope we have is if they require the cops to weigh in each day, and be no more than 20 lbs over their ideal weight. Nah-they've got a union, and we can't imagine what their leaders weigh. Pitiful.... Ted wrote on October 08, 2008 11:08 PM: It's not too late. Two things you can and must do to turn it all around in a matter of months_1. dismantle our current tax system and implement the 'Fair Tax' immediately (go to their website and read up on it). 2. Win against the Democrats and prevent them from ever having any legislative say in all things economic. Remember, they created this mess. Jimmy Carter started it and Bill Clinton expanded it. All for the sake politically correctness and vote buying, and now, Obama, the anointed one is about to, albeit ever so eloquently show us all how to bend over and take it. How sad and shallow some of you are, to be so smitten or mesmerized or perhaps hypnotized by his presence or is it his delivery? Even though everything he's ever said or promised has been one big and eloquent 'nothing'. Alas George W. Bush, eloquent he is not and never will be, but it's about the only fault I could find in the man. He has done everything that's ever expected of a President according to the Constitution of the United States, even though the attacks and slanders against him began well before he took office. (you can check all this out). But who cares, since many are gullible (by choice) and equally many are uneducated (by design) and will likely vote for Obama. All I can say is_practice bending over. Vegas Vic wrote on October 08, 2008 08:30 PM: The answer is NOT increasing taxes on anyone. It's time for governments, both state and local, to start doing was every private business has to do when they aren't making a profit...lay people off. That may sound harsh but reduced revenue + excess employees = bankruptcy. It's not much more simple than that. All of the bloated departments in government need to be pared back. Some of the departments can be done away with completely, being a result of the glut of revenue from years past. Carrie32 wrote on October 08, 2008 07:59 PM: Well, how did Nevada wind up dead last? Were we asleep at the wheel? The whole country is in a mess. I'd like to blame it all on Harry Reid, but there's plenty of blame to go around. I'm sure we'll all have a chicken in the pot when Obama gets in. Yeah, but don't bet the farm. srgioisanidiot wrote on October 08, 2008 05:48 PM: I am shocked to hear that Sergio is a Ron Paul guy.(that was sarcasm Serge) How come all the conspiracy theory nutcases flock to Paul? Read All Comments