Nevada Retains AA Credit Rating

Tuesday, Nov. 26, 1996 | 11:59 a.m.

"We're not very happy," said state Treasurer Bob Seale in discussing the notice he got from Fitch Investor Service. An upgrade would have meant millions of dollars in savings with future state bond issues.

Seale led the effort to persuade Fitch that Nevada was a good risk. Echoing Standard & Poor's Rating Services and Moody's Investors Services, Fitch said the state's financial base is too reliant on the gaming industry, which is fueled by discretionary income from gamblers.

When there's a downturn in the national economy, these rating services say the gaming business will be one of the first to suffer as potential players hold on to their extra cash.

The gambling industry has boomed in recent years, particularly in Las Vegas. But the hotel-entertainment segment still accounted for 25 percent of the jobs in 1995, compared with 26.3 percent in 1992.

"We've been a double-A for 20 years and we've done nothing but get better," said Seale, who questioned what the state would have to do to improve its rating.

When the recession struck in the early 1990s, Gov. Bob Miller cut government spending and laid off 260 state employees.

Since then, Nevada has created a $100 million "rainy day" fund to help it weather future financial problems. But that hasn't been enough to convince the rating services.