Not much to celebrate this Nevada Day

By David McGrath Schwartz

Saturday, Oct. 31, 2009 | 2 a.m.

It’s another miserable birthday for Nevada.

As the state marks its 145th year of statehood this Nevada Day, residents can reflect on the wreckage of the past 12 months. An unprecedented number of Nevadans lost their jobs, lost their houses and turned to a struggling government for help. Generally, the state felt like it was going nowhere fast.

On Nevada Day 2008, leaders statewide in politics, economics and culture surveyed by the Sun acknowledged the state was struggling. But none predicted how far we would fall.

Conditions 12 months ago now seem like a relative Eden compared with the state’s current fix.

Unemployment was 7.4 percent. Today it’s 13.3 percent, the second highest in the nation.

Gaming revenue had been in decline for eight months. That streak now stands at 20 months, with the latest receipts down nearly 10 percent from last year’s depressed numbers.

Political leaders have had their struggles. Lt. Gov. Brian Krolicki stands indicted on four felony counts. Sen. John Ensign is under investigation for actions related to an affair he had with a campaign staff member and efforts to land lobbying work for her husband, who worked for the senator as a top aide.

Perhaps most troubling is what has happened to the state’s population growth, long a source of pride that Nevadans could cite as proof the state was a place that the country wanted to emulate.

Jeremy Aguero, a principal with the economic consulting firm Applied Analysis, estimates that last year Nevada was growing at rates from 1 percent to 1.5 percent. Now, he believes Nevada is shrinking.

“We’re in a deep economic recession, bordering on depression,” said Guy Rocha, a state historian and former state archivist. “People are hurting, and they’re hurting badly.”

Nevada’s unofficial cheerleader, Mayor Oscar Goodman, said: “It’s as bleak as it has been in my recollection.”

Many community leaders, while harboring private concerns, publicly want to stay upbeat.

They point to positive signs. CityCenter is set to open in December (after teetering toward a halt, like its fellow Strip properties Fontainebleau and Echelon.) The plunge in home values means Las Vegas is affordable again. And the sun continues to shine, making it an appealing destination for retirees escaping snowbound climes.

The national economy looks like it’s starting to rebound, and even if the resurgence hasn’t yet reached us, money in the pockets of people in Duluth means they’ll start to travel again and feed the slot machines that fund Nevada schools and spur job creation.

“We’re beginning to hear, more and more from business members, there’s a pulse out there,” said Veronica Meter, vice president of government relations for the Greater Las Vegas Chamber of Commerce. “People are more confident. They’re beginning to spend, beginning to invest again.”

The numbers don’t yet support that anecdotal evidence.

State economists said that for months, we have been “bouncing along the bottom.” Then came this week.

A major airline announced plans to cut almost in half its Las Vegas flights. Taxable sales, the measure of spending on most things other than groceries, fell nearly 25 percent in August from a year ago.

“Looking through the lens of where we have been over the last five years, you have to be depressed,” Aguero said. “What’s come into startling focus in some ways, this looks more like normal than what we experienced between 2005 and 2007.”

Still, he sees reasons for optimism.

Home prices have stabilized over four to five months, and sales have picked up.

He says the casino industry, which has slashed jobs, is due to hire back some of those workers. CityCenter, if it’s like previous major resort openings, will expand the tourism market rather than just cannibalize business from other Strip properties.

And, he points out, we remain a low-tax destination compared with states such as California. Nevada is an attractive place, he says, for businesses to relocate.

“I know I’m more optimistic than a lot of people, but the reason I am is that prosperity over the past 20 years is not an accident,” Aguero said. “It was not that we were at the right place at the right time. Good decisions were made.”

In the 1980s and 1990s, leaders chose to invest in the state’s infrastructure, building the Las Vegas Beltway and expanding McCarran International Airport.

“Hard choices were made to keep the state’s tax structure low. Maybe it’s too low. That’s a fair argument. But we can take advantage of being a low-cost alternative to places like California,” he said.

But Aguero admits that even if gaming comes back, the construction industry — residential, commercial and the building of megaresorts — won’t come back, leaving a gaping hole in the state economy.

William Anderson, chief economist of the state Department of Employment, Training and Rehabilitation, reported this month that construction boomed between 1997 and 2007, adding 48,000 jobs. Over the past two years, 50,000 jobs have been lost in that sector.

Uniformly, those interviewed for this story said that Nevada needs to diversify its economy. Some pointed to renewable energy projects and “green jobs.” Some pointed to the hope that the state’s universities could partner with private businesses to attract high-tech industries.

Rocha, the Nevada historian, called that wishful thinking.

The state, he argued, has long underfunded its education system, both at the university level and in primary grades. That has made getting the highly trained, highly skilled workers more difficult.

“We’ve not been concerned about the educational infrastructure,” he said. “Businesses will look and say, ‘Is it cheaper operate in my state than your state? Sure.’ Then they’ll look at the education system. You need it to support businesses, support families. They won’t come here.”

He predicted that Nevada will attract low-wage jobs, while high-tech companies looking for cheaper alternatives will choose Salt Lake City and Colorado.

Last year, Rocha told the Sun, “We can celebrate the past, but certainly not the present. And the future is doubtful.”

This year, he said, “it’s more true today than it was last year. We have made very little progress if we’ve made any progress whatsoever.”

“All these people trying to do happy-talk stuff, it’s deceptive. I mean, it’s free speech, but who pushes back? Who says the king has no clothes?”