Nevada Bracing For Budget Hit With Virus Hurting Tourism

Hotel-Casinos Into First Week Of Monthlong Closure

Associated Press
March 25, 2020 - 6:16 pm
 A Las Vegas Metropolitan Police Department vehicle is parked at Paris Las Vegas as parts of the Las Vegas Strip go dark as a result of the statewide shutdown due to the continued spread of coronavirus across the United States on March 19, 2020

Ethan Miller/Getty Images

LAS VEGAS (AP) — With Nevada’s world-famous nightlife and gambling at a near standstill to slow the spread of the new coronavirus, state leaders are bracing for a serious hit to the state budget just as demand for services like unemployment benefits are expanding. 

Gambling taxes are the second-biggest revenue generator for the state after the sales tax, which will also take a hit with many stores being closed. The casino and hospitality industries also drive other revenue sources, like taxes on liquor and live-entertainment shows. 

“There’s almost no tax that is unaffected,” Jeremy Aguero, a Las Vegas-based analyst. His firm completed a study for the Nevada Resort Association that found “the economic implications of this crisis appear unprecedented, far-reaching and have the very real potential to cripple the Nevada economy.”

If the state’s tourism economy is shuttered for 30 to 90 days, state and local governments are expected to miss out on more than $1 billion in tax revenue just from the casino and resort industry, the report found. That estimate doesn’t factor in other expected drops in sales tax revenue and other taxes that the rest of the state economy is expected to feel. 

And that shortfall would come at a time when demand for programs like unemployment benefits, Medicaid coverage and first-responders will increase. 

“The combination of those two things can create an untenable situation,” he said. 

The good news is the state has a rainy-day fund of more than $400 million in addition to other surplus funds available, which adds up to a bigger reserve than the state has had in a decade, said Democratic state Sen. Joyce Woodhouse, the co-chair of the Nevada Legislature’s budget committee. 

Lawmakers will get their first sense of how bad the budget blow will be at her committee’s next meeting, scheduled for April 16, though it will take months to know the full scope of the problem. 

“Of course there will be a very significant impact on the stage budget,” Woodhouse said. “Our hotels are empty of guests, and now with the shopping malls and all of that closed too, it has a huge impact.” 

To combat the spread of COVID-19, Gov. Steve Sisolak ordered a monthlong halt to gambling, the closure of the state’s casinos and non-essential businesses and a stop to dining in restaurants, requiring them to shift to takeout or delivery. 

“I know that gaming and hospitality is the lifeblood of our state. I see and I feel the damage that this is causing,” Sisolak said at a news conference last week. The Democrat said the steps were necessary to protect people and save lives. 

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.

Nevada has seen more than 320 residents test positive for the virus, including six deaths.