Tourism-dependent Nevada has reason to worry
Las Vegas Mayor Carolyn Goodman has made headlines for Darwinistic statements about re-opening the strip, but the tourism-dependent state has real reason to worry.
Nevada was one of the last states to recover from the Great Recession continuing to post double-digit unemployment rates long after other states had begun to recover.
The state's tourism-based economy is taking an “outsized hit from disruptions caused by the coronavirus and efforts to contain the pandemic,” according to a Thursday report from Moody’s Investors Service.
Nevada Gov. Steve Sisolak ordered a 30-day closure of the state’s nonessential businesses on March 17, and has since extended that to the end of April.
Job losses in Nevada prompted by the coronavirus will be the most of any state because of the employment is concentrated in the economically sensitive leisure, hospitality and retail industries, Moody’s analysts wrote. Gaming and tourism is the state's largest industry with employment in leisure and hospitality accounting for one in four jobs, according to Moody’s.
A 20.1% loss of private-sector jobs is projected in Nevada by the summer compared with a loss of 15.4% for the U.S. as a whole, according to The Economic Policy Institute, a nonprofit think tank.
Las Vegas Mayor Caroyln Goodman, an Independent re-elected for her third term a year ago, said this week in interviews with MSNBC and CNN that the Las Vegas Strip could act as a control group for the pandemic. She walked back those statements in an interview with Fox News Thursday, saying she wants safety precautions to be followed and is asking that businesses be reopened in Las Vegas as is being done in other states, according to Jace Radke, a spokesman.
Sisolak had fired back against the mayor's earlier comments saying they certainly were not re-opening The Strip under the conditions Goodman suggested.
The governor said he is not determing when the state would re-open, the science will determine that.
“I do not want to risk the chance of undoing it by opening a week or two early and then have us have another spike and have to shut everything back down again and start back at square zero," Sisolak told local media.
The closure of all casinos is unprecedented, according to Moody’s, and will “lead to large state revenue declines given the state’s reliance on discretionary consumption taxes, namely sales and gaming taxes."
The state’s proactive budget management, strong liquidity and reserves and low liabilities will help soften the blow to state finances, Moody’s analysts wrote.
Moody’s had upgraded the rating on the state’s $1.2 billion in general obligations to Aa1 from Aa2 in November. The upgrade included bonds described as general obligation limited tax.
The upgrade reflected “the state's strong and growing economy as demonstrated by robust employment and population growth and an increase in rainy day reserves. The upgrade also incorporates the state's moderate debt and pension burden and favorable demographic trends, balanced by economic concentration in the gaming and tourism industry and a volatile revenue structure that is mitigated by strong governance practices.”