There’s Nevada. Then, there’s Las Vegas.
When it comes to talk of economic recovery, they are one in the same.
But updated data presented to the Economic Forum on Tuesday highlights — once again — just how uneven the impact of the coronavirus pandemic has been within Nevada. Although the state overall appears to be recovering quicker than previously anticipated, the full economic impact on Las Vegas may not have been felt yet.
The Economic Forum in December forecast $8.5 billion in general fund revenue for the upcoming 2021-23 biennium. That figure on Tuesday was revised by the five-member panel to $9.1 billion, giving state lawmakers approximately $586 million more money to play with during the remaining weeks of the legislative session.
Economists attributed the upward revision to several factors. Democrats through a special election in Georgia took control of the U.S. Senate in January, allowing for the passage of a stimulus package that was larger than would have been expected under a GOP-controlled Congress. Distribution of the covid-19 vaccine began in December and continues at an encouraging pace. Capacity and social distancing requirements are relaxing. And, in the meantime, cabin fever leading to “irrational exuberance” appears to have boosted revenue even amid current restrictions.
Nevada is now expected to reach pre-pandemic levels of revenue within the upcoming biennium. That’s sooner than previously expected.
But some areas will lag. And it may be a long biennium for workers affected by the state’s most battered industries.
Nevada’s unemployment rate remains high at 8.1% — the sixth highest in the nation.
Department of Employment, Training and Rehabilitation Chief Economist David Schmidt noted that if Clark County were a state, it would have the highest unemployment rate in the country. Conversely, Nevada’s 16 other counties combined would have one of the lowest unemployment rates in the country.
Put another way, most of Nevada has already returned to “normal.” Clark County is the exception.
“That’s a very big exception,” added Schmidt.
Casinos on the Las Vegas Strip are beginning to relax restrictions, which could lead to additional business reopening and more jobs returning. But Schmidt noted that in previous recessions, not all of the casino-hotel jobs that were lost returned. To what extent that happens going forward remains to be seen.
Wynn, Encore and Cosmopolitan announced this week they will soon return to 100% capacity because more than 80% of their employees had received a covid-19 vaccine. Several local casinos, including The Palms, Texas Station and Eastside Cannery, remain shuttered.
Despite these restrictions and closures, gaming has rebounded surprisingly well, according to an economist from the Gaming Control Board. The better-than-expected gaming revenue is attributed to new gamblers who might have turned to casinos while other forms of entertainment were closed, as well as to pent-up demand and excitement over sporting events like the NCAA basketball tournament which didn’t happen last year.
The Economic Forum revised its projected gaming revenue from $1.4 billion to $1.5 billion over the biennium. Projections for taxable sales — the largest contributor of money to the general fund — was also revised upwards by $197 million over the biennium.
Those figures came as a relief to the governor and lawmakers.
But pressure from lobbyists and advocates on revenue is unlikely to disappear with these new projections. The newly projected $9.1 billion general fund revenue figure is still lower than the $9.7 billion in budget requests submitted by state agencies at the beginning of the budget-setting process. And many would argue that the state budget immediately prior to the pandemic was not adequate to meet the needs of Nevadans.
Prior to the Economic Forum’s meeting Tuesday, the Nevada Association of School Superintendents publicly called on the Legislature to restore cuts made during the covid-19 pandemic. That includes: nearly $160 million cut in class-size reduction and more than $33 million in cuts from the Read By Grade Three program. Education advocates have also been pushing for lawmakers to increase revenue to support a revamping of the decades-old funding formula, which is expected to be replaced by the more transparent pupil-center funding formula. That cost of adequately funding K-12 education has been previously estimated to be $1 billion annually.
The state’s higher education system and Medicaid program also took significant budget cuts during the pandemic.
Democratic Gov. Steve Sisolak in a statement released by his office said, “The increase in revenue projections announced today along with the funding the state will be receiving from the American Rescue Plan will put us in a better position to begin stabilizing the state’s fiscal situation, restoring critical services and getting assistance to Nevadans most in need.”