Vol. 4, No. 24
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October 15, 2007
Nevada's Online State News Journal
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Unemployment Still
High In Nevada
Sales Tax Income Still
Off As Well
Housing Market Drives Much
Of Nevada's Economic Picture
Housing foreclosures continue at a high rate in the Silver State and homes, new and used are not selling. Mortgage companies and banks have tightened their belts and do not offer highly speculative programs to those unable to fulfill contracts. And all of this is leading to what some call a serious downturn in the Nevada economy. Nevada's unemployment rate stood at five percent for August with 3.4 percent more workers on the job compared to a year earlier.
In Las Vegas, the unemployment rate was also five percent while the Reno rate stood at 4.4 percent. The national rate is 4.6 percent, and California's rate (July) was 5.3 percent. Construction jobs in Nevada were off by more than three percent and that is believed to have led to a decrease of more than one percent in gaming jobs. Government employment of course increased a solid 4.4 percent.
The sales tax picture for July was not good with a decline of 2.6 percent with large purchases off the most, such as automobile sales and furnishings for the home. Governor Jim Gibbons said, "Nevada continues to feel the effects of the slow housing market and decline in auto sales, a trend exhibited over the past several months." In Clark County, sales tax receipts were off by 1.3 percent, and in Washoe County the decline was 4.1 percent.
According to the state taxation department, 11 counties showed a decrease in taxable sales for July compared to July 2006, including Carson City, Churchill, Clark, Douglas, Esmeralda, Humboldt, Lander, Lincoln, Nye, Pershing, and Washoe. The state took in $294,850,235 for July, down 2.26 percent from one year ago. Gibbons pointed out there were increases in sales in the wholesale and general merchandise business categories with strong sales in the clothing category. He said, "We will be cognizant of future economic tendencies and their affect on our state."
In the meantime, the Gaming Control Board has released figures that indicate the total gaming win, that is what the casinos took in from table games and slot machines before any expenses are deducted, was off considerably in August compared to August of 2006. The report, a regular monthly paper released by the Board indicates the casinos in the state raked in $1,016,465,602, off by 4.41 percent from a year ago. For the current fiscal year, which began July 1, the win is up by 2.84 percent from this same period in fiscal year 2006-07.
The Clark County casino win, including the Strip area was off by 5.42 percent while Washoe County's casinos showed a decrease of slightly less than one percent. North Las Vegas showed the largest decline in the state, off by more than 24 percent while Elko County was in the black, up by 13.68 percent. Governor Jim Gibbons said, "Following several months of strong growth, August gaming results were below expectations."
Part of the strength in the north may have come from the major special event, Hot August Nights, while there were no major events in southern Nevada. The state coffers were filled with $58,141,148 in taxes during September based on the August win. Gaming taxes are collected on the gross win (See this edition's feature article). The tax collection is off by 13.24 percent compared to one year ago. For the fiscal year, taxes have amounted to $182,834,576, off by 2.5 percent from this same period in fiscal year 2006-07.
In recognition of the failing housing market, Gibbons called for a "summit" with various representatives of the industry including bankers, mortgage company reps, builders, and others with the idea of having "a better chance to make progress toward finding help for those Nevada homeowners who are in need of assistance," according to Mendy Elliott, director of the Department of Business and Industry (DBI).
The meeting took place on October 4 in the Las Vegas Chamber of Commerce conference rooms. Speaking of the turn out of industry leaders, Gibbons said, "While each institution has its own experience and level of exposure to the problem, I am pleased that so many lenders and credit guarantors are stepping up to the plate." Gibbons is holding a budget hearing today (October 15) to discuss a possible shortfall created by the economic problems discussed in this article.
Senate Majority Leader Harry Reid (D-NV) also met with state, federal, and agency leaders to discuss ways they can work together to help Nevadans with foreclosure problems. Reid got very political using the current Iraq war to make a point by saying, "For one week of spending on the Iraq war, roughly $2.3 billion, the federal government could provide housing counseling agencies the resources they need to help 1.7 million families."
Reid is calling for increased funding at the federal level for foreclosure prevention. Reid met with Gail Burks, President and CEO of Nevada Fair Housing Center, Assemblywoman Sheila Leslie (D-Reno), and Wells Fargo Nevada Region al President Kirk Clausen to develop a solution to the foreclosure problem.
Nevada has the less than enviable position of leading the nation in the number of mortgage loan foreclosures per capita, and the housing market isn't just flat, it almost doesn't exist. New and used homes are simply not selling, prices are falling, and auctions are taking place weekly. Las Vegas is the leader in foreclosures in the state. For the last several years there has been a booming market with prices constantly climbing. Speculators, able to get loans that many are now saying should never have been let, were buying and selling properties all over the state. When a slight slow down in the market hit, many of those loans came due before the speculators could sell off the property.
Many people who were not speculators were also given very good treatment in getting their mortgages, and when the mortgage rates were reevaluated, could no longer afford to pay the premiums. The governor said, "As governor, I have an obligation to help solve problems facing our state and our families." He went on to say, "While I cannot promise that we will immediately have a plan that will solve 100 percent of the problem, I can promise that I will work with these lenders and credit guarantors to find ways to address this complicated issue using private market solutions." He said that state taxes are not the answer.
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