Mixed forecast on Nevada economy

CARSON CITY -- Nevada faces serious challenges to its economic well-being from the growth of legalized gambling in almost every other state - especially California, lawmakers were told Wednesday.

Around the country, gamblers are increasingly playing cards or putting coins in slot machines at home, judging by the slow growth in Nevada's hotel room tax collections.

State tourism director Tom Tait said an initial projection of an 8 percent yearly increase in room tax collections had to be scaled back to just 3 percent.

"We face severe challenges, more so now than ever before," Tait told the Assembly Ways and Means Committee.

Gambling is now legal in one form or another in 48 states and nearly all Canadian provinces. And the approval of Proposition 5 in California, allowing expanded Indian gambling, threatens Reno's casinos in particular, he said.

"People in California are going to be able to travel just 15 or 20 minutes from their homes to gamble," he said.

Room taxes aren't the only indicator of trouble. Airport volume is down 1.8 percent and auto traffic counts are down 1.4 percent in Nevada.

"Part of that is the economic downturn in Asia and Latin America," he said. "You have to look at the world market."

People from key markets such as Los Angeles, Portland, Seattle or Phoenix would normally travel four or five times a year to Nevada. Now, said Tait, they'll show up only two or three times.

"Our customers are impacted by world events and so we are impacted too," he said.

The committee also got a mixed report from the Economic Development Commission, which has a mandate to diversify Nevada's casino-dependent economy.

"Hotel and gaming jobs are down and (the state) continues to decline on its reliance on gaming," said executive director Bob Shriver.

Shriver said his commission helped create more than 8,000 jobs in manufacturing, distribution and financial services over the last two years, paying higher wages than what gambling and related industries pay.

Shriver asked the committee for $70,000 that wasn't included in the governor's Economic Development budget, to help local governments upgrade water and sewer systems, build industrial parks or make other improvements.

Committee members also voiced concerns about the state's tax structure.

"Our faulty tax system discourages investment and job growth in the state," said Assemblywoman Chris Giunchigliani, D-Los Vegas. "We've narrowed our base so much that it is hard to offer (businesses) incentives (to move to Nevada)."

Shriver disagreed, saying that the lack of a corporate income tax helps him sell Nevada as a good place for out-of-state businesses to set up shop.

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