Thursday, July 24, 2008

Nevada's fiscal woes among worst in Nation

The bad news just keeps pouring in for the once thriving, and once believed to be, "bullet-proof" Nevada economy.

Though I've been warning folks of the looming downturn since early 2006: Las Vegas—A House of Cards Bound to fall, many disregarded the info and/or considered me a nutcase.

Anyway, since that time, I've been trying to keep readers abreast of the unraveling situation as I see it.

A few of my situational awareness posts:

Las Vegas housing downturn is leading the Nation:

Nevada Tops in Foreclosures AND Price Declines!

Home to 15 of the top 20 zip codes hardest hit by the housing/foreclosure meltdown:

Las Vegas Tops Foreclosure List

Four years of housing gains lost in one:

We Ain't seen nothin Yet

Fewer flights mean less tourists and less gaming revenue:

Airlines: More problems for Las Vegas Strip

Las Vegas Gaming revenue is falling fast -- faster than post 9/11:

Las Vegas: Gaming Revenue down > 16%

Casino layoffs have just started:

The Las Vegas Economic Downturn Has Started

Vegas locals flat broke:

Las Vegas: All flash and no cash

High-end Auto Repo Business is booming:

Las Vegas Economic Downturn Increasing "High-line" Auto Repos.html">

Local Banks are having difficulty coping:

Local Banks Effected by Las Vegas Real Estate Crisis

Well, if the situation weren't dire enough already, it's now being reported that Nevada is among the top three in the nation for state revenue declines:

Nevada's fiscal woes among worst in nation

CARSON CITY -- As if you needed more bad news, Nevada's economic downturn now ranks as one of the worst among the 50 states.

A National Conference of State Legislatures report released Wednesday found that tax revenue in Nevada fell by 7 percent in the fiscal year that ended June 30 compared to the previous year.

Nevada ranked No. 3 among the 17 states that reported revenue declines, led by a 7.5 percent drop in Oregon and a 7.3 percent decline in Florida.

Twenty-eight states, including Nevada, expect further declines in the current fiscal year, according to the NCSL report. Nevada already has approved measures to reduce spending by $800 million in the current fiscal year.

"We are all going through the same problems," said Ben Kieckhefer, a spokesman for Gov. Jim Gibbons.

He said there is no magic tax that can snap Nevada and other states out of the economic doldrums. Gibbons remains committed in his opposition to any tax increase, Kieckhefer said.

"When the economy is struggling, it is not a good time to raise taxes," he added. "We need to cope with the revenue we have and weather the storm. If there were a recession-proof tax that didn't hurt people, then someone at MIT would have thought of it."

Kieckhefer said Nevada faces a special problem because of its tourist-based economy.
"It is not surprising that we are faced with economic problems when the national economy experiences a downturn," he said.

Since November, Nevada has cut spending in its two-year budget that ends next June 30 by $1.2 million. That is equivalent to 17.7 percent of its $6.8 billion two-year budget.

Bottom Line:

There's no end in sight to the bad news and (I believe) this bad dream will soon turn into a nightmare -- when the casino layoff's begin in earnest.

Note: I honestly get no joy out of seeing my local economy fall apart and watch neighbors/co-workers and friends lose their homes, jobs and previous way of life, but I do get a sense of "I-told-you-so".

What really bothers me though is: If a simple telecommunications manager and lay-economist (me) could plainly see this train wreck coming over two years ago, why couldn't the so-called "experts" see it -- and possibly do something to better prepare?



Anonymous said...

I have been warning people ever since last fall that things were going to fall apart, but few took me seriously.

I am no rocket scientist, but am a reasonably smart guy with no economics training at all. My best friend, a stockbroker, who has his finger on the pulse of Wall Street, is slowly starting to realize that things are going to fall apart. This was after he chided me for getting out of the market last fall.

He continues to stay in the market and will lose his ass in his retirement account before this is all over.

Sometimes, the so-called experts, just can't see the big picture, they are so caught up with the here and now.

Kudos, for your great site.

Steven said...

THEY SAW THIS COMING they just did not talk about it because some of them were making truckloads of money like GS. Others like Bear Stearns made money too but either had their timing wrong or were too aggressive or whatever...

These SOBs saw all of this both the financial ones and the political ones. These people do not care about my children or your children or whomever.

Patrick said...

Bank Closing - First National Bank of Nevada, Reno, Nevada

Mutual of Omaha Bank Acquires All Deposits of First National Bank of Nevada and First Heritage Bank, N.A.

All Insured and Uninsured Deposits Transferred to Acquiring Bank

First National Bank of Nevada, Reno, Nevada, and First Heritage Bank, N.A., Newport Beach, California (owned by First National Bank Holding Company, Scottsdale, Arizona), were closed today by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC entered into purchase and assumption agreements with Mutual of Omaha Bank, Omaha, Nebraska, to take over all of the deposits and certain assets of the First National Bank of Nevada, Reno (also operating as First National Bank of Arizona, which recently merged into it), and First Heritage Bank, N.A., Newport Beach, California.

Patrick said...

Recession taking its toll on Las Vegas economy

The Las Vegas economy is continuing its slump, and commercial real estate and development are paying the price.

Randy said...

Thanks Patrick - I'll post up about the bank



I believe it.