That was the bleak forecast given by state Budget Director Andrew Clinger during a speech Wednesday at the Nevada Legislative Conference held at the Atlantis Casino Resort Spa in Reno.
“Nevada’s economy is no longer in free fall,” Clinger said at the outset, “but economic indicators continue to drip down,” with foreclosure and unemployment rates leading the slide.
Gaming and sales taxes account for the state’s largest revenue sources, but the nation’s highest rate of joblessness has caused significant decreases in discretionary spending throughout Nevada, Clinger said. Moreover, thousands of jobs in the gaming and hospitality industry have been slashed in recent years, creating a vicious stream of lost employment resulting in lost income resulting in lost tax revenue.
When adjusted for inflation and population growth, the tax revenue collected by the state last year reached its lowest mark since records were first kept in 1982, Clinger said.
The construction industry, a dominant market force in the state during times of economic growth, has, perhaps, been hit the hardest.
About 40 percent of construction jobs in Nevada have been eliminated since 2007, Clinger said, accounting for about 1,400 lost jobs per month over that timeframe.
“Job growth is the only way to get all economic indicators to come up,” Clinger said.
But all economic signs point down a slow road to recovery.
Facing between $1.1 and $2.7 billion in deficits for the 2012 and 2013 fiscal years, according to projections from the Nevada Economic Forum, an overhaul of the way the budget is built was immediately necessary, Clinger said.
Rather than taking an incremental, line-item approach to the budget, Clinger said an outcome-based initiative could better identify spending priorities. Moving from simply evaluating the costs of government agencies and departments toward an outcome-per-dollar budgeting method would help establish better cost-efficiency standards for every action and activity public money is allocated to support.
Given the budget constraints and expected cuts, Clinger believes no more time can be wasted in implementing this new approach.
“If we don’t start at some point,” he said, “it will never happen.”
The biennium budget will be delivered to Gov. Brian Sandoval Jan. 24. Sandoval will give his State of the State Address that same day.