it all depends – ” O! Thereby hangs a tale. “

Othello and Desdemona (1829)

Recently a reporter doing a story on casino property taxes called me for a quote for her story.  The city’s and the county’s revenues are going down, from all sources and that includes casino property taxes.  Among other things, we talked about the importance of gaming to the local government and economy.  It is a fact that gaming’s impact on Reno has been declining for 15 years; still, for the city and county the impact of a downturn in gaming is  severe; for the reporter I tried to put the current situation in terms of business in general – gaming is suffering as all businesses are suffering.  That may be true, but for the state of Nevada the reduced gaming taxes is becoming a disaster.  Nevada relies heavily on gaming, so much so that when gaming is in trouble the state is in trouble; there are no other existing source of revenue large enough to fill the hole left by the loss of gaming revenues.  The governor, Jim Gibbons, has been forced numerous times to make cuts in state services, reducing salaries, hours and benefits of state employees in hopes of bringing the budget back into the balance required by law.  Just about the time he thinks he has things under control the state’s gaming commission releases results from another month revealing once again less revenue than estimated in the budget.  And then Gibbons is forced back to the drawing board looking for more ways to cut expenses.  He has even suggested that it is time for Nevada to diversify it economy, not a new idea, but one whose time has come.  The state legislature commissioned a study of the state’s economy and tax structure in the 1960s, it concluded that the state needed to diversify. Although no one then could envision today’s world with casinos or some form of gambling in virtually every state ( pun intended); still the researcher could foresee a time when gaming might go into to decline and leave the state with no viable alternative form of revenue.  There have been other studies since, and all of concluded the same thing – you cannot rely on one industry, one source of income.  Just ask the people in Detroit how trying it is when the major industry goes into serious decline.  The day the researchers were talking about has arrived, gaming in Nevada is faced with serious competition on every side and one day in the very air around us; gaming in Nevada will never again dominate the way it once did.  That does not mean that Las Vegas won’t get over the current crisis, it will, but even then we cannot depend on gaming to be the major source of funding for our government.  I have no idea what alternative sources Nevada may find, but diversify it must.

These thoughts were brought on by that discussion with the Gazette-Journal reporter, but an article in the Las Vegas Sun today really brought it home. [Las Vegas Sun]  According to the Sun, Las Vegas is the most tourist depended city in the country.  The reasons: Las Vegas is first of the 23 cities ranked with 29.9 percent of total employment tourism related, 22 percent of compensation of total compensation in the city and the highest tourism salaries in the country; Vegas was second in the percent of the gross domestic product with 19.5 percent; the city is ranked fourth in annual visitors behind Orlando (48.9 million), New York (47 million) and Chicago (45.6 million), but ahead of Atlanta (37 million) and Atlantic City (33.3 million), Las Vegas had 40 million visitors in 2009, down from 44 million in 2008 and 47 million in 2007. And thereby hangs the tale – we, the state of Nevada, are hanging – depending too much on tourism and Las Vegas. Las Vegas is moving down the list while Orlando and New York, even in difficult times, have maintained their relative position on the list.  That suggests that gaming is not as strong a draw as “big apples” and a fantasy land for children.  Depending too much on gaming won’t work for the next 70 years the way it did for the last 70.  Any suggestions for diversification?