Nevada’s tax revenue predictions are grim. Monday’s Economic Forum concluded that the state is in a recession it’s unlikely to recover from within the next two years. And as News 3’s Jesse Corona explains, over 60 percent of our state tax base depends upon two sources tied closely to tourism.
Economic Forum Chairwoman Cathy Santoro relayed the sobering news: Gaming tax revenue is down 11 percent and isn’t expected to make an improvement by the end of the fiscal year.
„I think anyone…will tell you that the gaming industry has never seen it as bad as it’s been lately,“ says Santoro.
MGM-Mirage spokesman Alan Feldman claims 62 percent of our state revenue comes from that gaming tax, in addition to a sales and use tax, which is projected to drop 8.6 percent since last year.
„We’ve faced the fact that Nevada’s revenue is almost single-sourced,“ says Feldman. „The overwhelming majority is coming from the tourism sector.“
And as tourism continues to suffer in Nevada, so does our state budget. Hotels have continued to experience drastic drops in room rates. The philosophy, according to Feldman, is to attract new visitors to Las Vegas and to the gaming tables.
„The thinking is now (to) keep the rooms full,“ explains Feldman. „The one thing is an empty room drives no revenue and an empty room starts putting jobs at risk.“
But this philosophy only works if people have disposable income – something in short supply with the poor economy.
Senate Majority Leader Steve Horsford says the Economic Forum numbers demonstrate the crisis this state is in – a crisis lawmakers will attempt to resolve for the short-term during the upcoming special session next week.
„They show just how bad the situation is for Nevada and Nevadans,“ says Horsford. „I mean, the choices and options are very sobering and they’re difficult.“
Will this mean more layoffs for the gaming industry?
MGM-Mirage’s Feldman says, „At this moment in time, with the uncertainty that exists in the market with the frozen credit markets as they are, I think it would be foolish to be making predictions that are too rosy about anything in the next couple of years.“
Casino executives say they are not surprised at all by the numbers released by the Economic Forum. MGM-Mirage says they saw trouble on the horizon in August 2007 and have been saying the word „recession“ long before Washington felt comfortable using the term.