Nevada lawmakers created the Economic Forum almost 30 years ago to shield themselves from potential political fallout over revenue projections. Today’s legislators are no doubt thankful for the buffer.
Members of the five-member panel — appointed by legislative leaders and the governor — are charged with making binding tax collection forecasts that the executive branch must use when offering budget recommendations to lawmakers prior to each biennial session. That task has taken on added significance as the coronavirus leaves gaping holes in public-sector budgets.
On Thursday, the forum met for the first time since June to assess the damage. The news was not good.
The most recent fiscal year, ending June 30, saw a $369 million revenue drop, a 9.1 percent decline. While that was slightly better than anticipated — projections had pegged the shortfall at $457 million — Southern Nevada’s heavy dependence on the still-lagging tourism, travel and convention industries foreshadows continued problems.
“I’m very concerned about 2021 and 2022,” analyst Jeremy Aguero of Applied Analysis told the panel. While things may improve slowly in the coming months and the region may likely avoid a repeat of the devastation wrought by earlier business and casino shutdowns, he said, “it is the long arc of the COVID-19 crisis that keeps me up at night.”
Gaming and sales tax revenue — which constitute about 60 percent of the state budget — have yet to rebound fully, as several local and Strip casinos remain closed or operating at limited capacity amid depressed consumer enthusiasm. While vehicle traffic from California has returned to pre-pandemic levels, the forum learned, demand for air travel remains at record lows. In addition, the longer the pandemic drags on, the more likely that temporary behavioral changes become more ingrained or that convention business that goes elsewhere for the time being never returns.
The state has recovered only 52 percent of the jobs lost in April when Gov. Steve Sisolak imposed pandemic shutdowns. Most of those job losses were in Clark County, the state’s economic engine.
The forum has a thankless task as it prepares for a December meeting to finalize its projections. But two things are certain: Lawmakers can’t count on federal taxpayers to bail out the state, and it’s imperative that the Economic Forum err on the side of caution lest the budget gap grow even larger. The quickest way for the economy to recover post-virus is for state lawmakers and local elected officials to exercise spending restraint and to eliminate as many barriers as possible to encourage Nevada’s job creators and entrepreneurs.