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Revenue forecasts conflict at economic forum
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CARSON CITY -- Outside economists predicted Friday that Las Vegas is only a year away from returning to an economic boomtown.
But a state board that must tell the Legislature how much money it has to spend over the next two years isn't buying the prediction.
And state economists said the Nevada economy will improve only slightly during that time.
Moody's Analytics economists Gus Faucher and Dan White stunned Nevada Economic Forum members and state analysts by predicting the Las Vegas economy will be back to its boom days by 2012.
"We see a light switch going on," Faucher said. "Las Vegas is going to be the area that pulls Nevada out of the recession."
The Economic Forum, made up of five private business leaders from Nevada, must weigh this and other projections in making its own determination of how much tax revenue the 2011 Legislature will have to spend. It plans to make that decision Dec. 1.
Based on presentations Friday from state agency officials, that figure should be in the $5.3 billion range, or about $100 million more than Gov.-elect Brian Sandoval has been mentioning. But that comes amid a projected shortfall of about $3 billion.
Faucher and White predicted the nation's gross domestic product will increase by about 4 percent a year over the next two years and that the economy will create 400,000 more jobs per month.
Faucher said that once the national economy surges, tourists will flock back to Las Vegas and begin to gamble more money. Visitor volumes already have risen, but players aren't gambling as much as they used to.
The two economists projected casino revenue will increase 9.4 percent in the 2012 fiscal year, which starts July 1, 2011, and 13.1 percent in 2013, growth rates that occurred regularly in the past.
And the state's unemployment rate, the worst in the nation right now, will improve, they said.
"I don't think these are unreachable growth rates," White told forum members.
Economic Forum Chairman John Restrepo and other forum members were reluctant to accept the projections by Moody's Analytics.
"Believe me, we want to believe," Restrepo said.
Forum member Andrew Martin pointed out airfare rates are higher and fewer flights are available. He questioned how visitors can gamble more if they cannot find a flight or must use more of their disposable income to get to Las Vegas.
Alan Schlottmann, an economics professor at the University of Nevada, Las Vegas, warned forum members not to plug Moody's predictions into the budget.
"Consider a real conservative change in the state budget," he said.
Schlottmann questioned how Nevada can have a "robust economy again" when California is the gaming industry's biggest customer and its economists don't see a recovery there for at least two more years.
"I see nothing but a slow rate of growth for Nevada," Schlottmann said. "Be careful folks."
Not all forum members were so pessimistic. Member Matthew Maddox, the chief financial officer for Wynn Resorts, said his company is seeing positive signs of recovery and a big increase in room bookings for the coming year.
Michael Lawton, senior research analyst for the Nevada Gaming Control Board, predicted a 4.2 percent increase in gaming revenue in fiscal year 2012 and a 6.3 percent increase in 2013.
But a much more bleak picture of Nevada's economy over the next two years was drawn by Dino DiCianno, state taxation director, and Bill Anderson, the chief state economist.
DiCianno said the number of businesses that collect sales taxes has dropped during the recession.
DiCianno projected less than a 1 percent annual increase in sales tax revenue in 2012 and 2013.
"It will be flat because there is no job growth, no new businesses," he said. "We will have stagnant growth."
Anderson predicted the Nevada economy will add only 25,000 jobs in the next three years -- after losing 190,000 jobs in the past three years.
"The economy will bounce along the bottom," Anderson said.
Sandoval has vowed to balance the 2011-13 budget on existing tax revenue.
State government has been operating on a current, two-year budget of about $6.4 billion, but it includes federal stimulus funds and about $800 million in tax revenues that expire next year.
Some legislators have been talking about estimates that the state faces a $3 billion revenue shortfall. That is based on ending furloughs and wage freezes, continuing the expiring tax increases and covering social service caseload and other growth.
Sandoval must present his budget to legislators by mid-January.
Contact Capital Bureau Chief Ed Vogel at evogel@review journal.com or 775-687-3901.
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The only thing that is guaranteed is our debt. Why do we still listen to these morons???
These rose-colored-glass predictions run in sharp contrast to what most national economists have predicted. With Bernanke running the money presses at full speed to buy-up Securities to keep stock prices wrenched-up, how could anyone predict such an economic recovery for Nevada so soon, if at all? The central government can print more money as they see fit. Nevada doesn't have that luxury, and we must live within our means, period.
I appears that these economists have NOT factored in the coming economic COLLAPSE!! National, State, and Local elected officials are riddled with Oath BREAKERS...they're incapable of doing the right thing!!
Our military, law enforcement, and ELECTED OFFICIALS need to HONOR THEIR OATH TO THE U.S. CONSTITUTION!!!
oathkeepers.org
Legislators better listen to Alan Schlottmann in preparing the state budget. Extrapolating Moody's sunny prediction to a big uptick in state revenue is dubious at best. First, we have big hits to tax revenue due to declines in local businesses, local employment (especially construction) and fees associated with home sales. This type of revenue will not bounce back as quickly as casino revenue. Secondly, a 4% GDP is HIGHLY questionable. That is twice what we currently have. In August, Goldman Sachs lowered their GDP forecast for 2011 to 1.9%. Moody's says 4%? Thirdly, the consumer who comes here in 2011 will not be the same consumer who came here in 2007. They are saving more and are tighter with a dollar because they are trying to reduce their personal debt. In 2007, everyone thought they were millionaires because of their home prices.
Money can't buy you love, but it can buy you a consultant with a favorable view point. Someone needs to look at who brought in Moody's and what Moody's relationship with the state is before they accept Moody's sunny conclusions.
Only in Nevada do we continue to hire out of state folks who have no clue about Nevada. Isn't Moody's the same company they just paid $230,000 to for a tax study, who then defaulted and didn't deliver a tax study? Why would the state keep hiring them?
Firefighters need a cost of living pay raise before the Christmas holidays
9 1 1
Take notice of the propoganda from the Republican leadership, it is all taxes all the time, since the election.
They will not touch immigration. No, not a word about illegal immigration, big business loves cheap labor. Regan lives! Amnesty for all!
TOOOOOOOOOO MUCH OF THE GREEN HERB............
@Arkitect...I ask myself time and time again why did I buy a new summerlin house in June 2006 when all my gut instincts told me it was a bad move?..yeah I fall under the stupid category also...welcome to the club.