EDITORIAL: Coronavirus reveals Nevada economy still dependent on tourism, gaming

The economy of the “New Nevada” looks an awful lot like the “Old Nevada.”

In response to the coronavirus, Gov. Steve Sisolak ordered casinos and other nonessential businesses to close. As a result, Nevada went from setting a state record for low unemployment in January to setting a record for weekly unemployment claims, which topped 93,000 the week after the governor told businesses to shut down. For perspective, the population of California is 13 times larger than Nevada’s, and it had 187,000 new unemployment claims over the same period.

An economic downturn from coronavirus countermeasures was unavoidable. But the state was supposed to be less susceptible to such economic devastation. Over the past decade, former-Gov. Brian Sandoval told Nevadans repeatedly that he had a plan to diversify the economy as part of creating a “New Nevada.”

In 2012, the newly created Governor’s Office of Economic Development released an economic plan intended to achieve a “vibrant, innovative and sustainable economy.” The plan’s mission was “high-quality jobs for Nevadans.” Gov. Sandoval and state bureaucrats believed they could diversify Nevada’s economy by selecting and advancing “targeted sectors” of the economy. They were going to “align education, career training and workforce development to targeted opportunities” They also created the Catalyst Fund, which allowed the state to give away millions of dollars to companies in selected industries.

Politically, GOED was an enormous success. It allowed Gov. Sandoval plausibly to claim that his leadership was driving Nevada’s economic recovery instead of just paralleling the national upswing. Gov. Sandoval even called special sessions to give more than $1 billion in total tax breaks to Tesla and Faraday Future. Embracing the diversification mantra, legislators overwhelmingly approved those subsidies.

Tesla is a high-profile success story. Faraday Future was a failure. In between were scores of tax breaks worth millions of taxpayer dollars. Yet diversification remains a pipe dream. While eight years may be a limited time frame in which to judge the diversification push, the state is still more vulnerable than most. The Economic Policy Institute estimates that Nevada will lose more than 20 percent of its private-sector jobs — the highest rate in the nation. It predicts that Nevada’s unemployment rate will be 19.7 percent in July, trailing only Washington, D.C.

Whether these estimates come true — and let’s hope they don’t — Nevadans have learned that it takes much more than simply showering taxpayer largesse on favored businesses to better inoculate the state from recession. Despite the giveaways and Gov. Sandoval’s assurances, Nevada’s economy still rises and falls on the tourism and gaming industries.