Sales drop biggest since 2001

The drop is the biggest monthly decline since December 2001, according to Department of Taxation reports. Declines were common in the months following the Sept. 11, 2001, terrorist attacks.

“With this latest release of taxable sales and revenue collection data for May, Nevada continues to feel the effects of the slow housing market and decline in automobile sales,” Gov. Jim Gibbons said in a statement.

Business sales revenue in May was $4.112 billion vs. $4.265 billion in May 2006.

State economist Jim Shabi said national analysts look to the end of 2008 or early 2009 for the national economy to rebound.

He said Nevada’s housing slowdown may pick up early next year as some workers are hired for major commercial projects such as MGM Mirage’s CityCenter.

“We have been flat all year,” Shabi added. “There also has been a decline in job growth. We are in a slowdown period for the economy and for spending in general.”

Since the beginning of the fiscal year in July 2006, Nevada businesses have sold products valued at $44.94 billion, a 1.9 percent increase over the $44.1 billion in sales during the same period the previous fiscal year.

Clark County businesses have fared more poorly than those in most other counties. Their sales in May were down 3.8 percent and are up only 1.6 percent during the fiscal year.

Washoe County has done even worse. Its business sales in May were off 4.2 percent and sales for the fiscal year have dropped 0.7 percent. Nye County sales dropped 9.6 percent for the month, but remain up 5.4 percent for the year.

In all, 10 of the 17 counties in the state posted declines in business sales in May in comparison with the same month in 2006.

Mining dependent rural counties have been pacing the state in sales growth. Humboldt County sales in May increased by 260 percent. But the total sales in that county were only $40 million, a little more than 1 percent of the sales generated in Clark County.

Shabi said the slowdown has occurred not only in the housing market but in sales at building supplies businesses such as Home Depot.

Since the beginning of the fiscal year, sales at furniture and home furnishing stores in Clark County have dropped to $803 million, a 58 percent drop from the $1.93 billion during the same period the previous fiscal year.

Motor vehicle and parts sales in the county dropped by 12 percent while sales at general merchandise stores increased by 5.8 percent.

Reflecting higher gasoline prices, sales at gasoline stations went up 30 percent, climbing to $2.4 billion in the current fiscal year, compared with $1.84 billion the previous fiscal year.

Taxation Department officials warned about making month-to-month comparisons on specific goods because the department switched to a new national product classification system. But Shabi said the shift would not affect total overall sales figures.

The drop is especially important to state government since it receives 35 percent of its revenue from sales taxes.

Department Director Dino DiCianno reported the state portion of sales taxes for the fiscal year reached $911.5 million, an increase of just 1.85 percent from the previous fiscal year.

The tax revenue is $14.2 million less than projected on May 1 by the state Economic Forum. The projection was used in creation of the $7 billion, two-year budget approved by the Legislature in June.

Because of huge tax increases over the last four years, legislators in the 2005 and 2007 sessions could divide up surpluses, even rebating $300 million to residents in 2005. Now they may face shortfalls.

Cianno also said liquor tax revenue has dropped $2.8 million below Economic Forum projections, while cigarette tax revenue is $2.7 million below projections.