Las Vegas Sun

September 22, 2014

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Where I Stand:

There’s cause for guarded optimism

In August, Brian Greenspun turns over his Where I Stand column to guest writers. Today’s columnist is Jim Murren, chairman and CEO of MGM Resorts International.

Most of us probably wish the Great Recession was history, but we are all too aware that our state, our community, our businesses and our families must still contend with the realities of the economy. And most American workers, consumers or business owners don’t have the benefit of academic forecasts upon which to make their plans.

Our decisions about spending or saving, growing or contracting, are all made in real time, bringing the best information and judgment we can to bear on our decisions. We ground ourselves in the facts available, but we also have to make assumptions.

And sometimes — more often of late — we must take a leap of faith.

The Great Recession hit Nevada harder than any other state. Our foreclosure and unemployment rates lead the nation. And unlike most recessions where job growth slows or stops, we have seen a real decline in jobs, particularly in the state’s gaming and construction sectors.

We’ve lost some 180,000 jobs in the Silver State, and it’s not over. The Bureau of Labor Statistics recently reported that the nation’s largest over-the-year percentage decrease in employment for July occurred in Nevada.

You may consider the chairman of Nevada’s largest private employer an unusual source to be quoting unemployment statistics. But the economic health and future of our state is of critical importance to me as a businessman and, more important, as a husband and father.

We can’t rely on hope alone to lift us from these economic doldrums. Like all businesses in Nevada, we’re undertaking a wide variety of steps to improve our business. We’re finding alternative sources of capital, working to maximize the benefits of our database, creating new promotional vehicles, identifying new marketing partners and seeking new ways to stimulate consumer interest in Las Vegas.

And we’re seeing results. While guardedly optimistic, I’m pleased to write that there are clear signs of improvement in our state and our industry.

Visitation is up. And sales tax, one of Nevada’s main revenue sources, appears to have finished a more than four-year slide. But gaming revenue, Nevada’s other major revenue source, is less certain; we don’t know definitively that state gaming win has begun to recover.

Consider MGM Resorts International’s second-quarter 2010 earnings. It’s not surprising that most news reports focused on our per-share losses. Believe me, I focused on those results, too. But we projected improvements in revenue per available room, and that’s exactly what happened.

In fact, June marked MGM Resorts’ first positive revenue-per-available-room month since October 2007. Convention bookings remain strong, with convention room nights for 2011 about 20 percent ahead of pace.

CityCenter’s Aria is seeing improved occupancy and continues to be the second-highest priced property within our portfolio.

These measures of improvement offer some concrete examples of early economic recovery in our industry.

And it’s not just consumers and business people who face the uncertainty of making decisions in real time. Our political leaders do, as well.

In February a new governor and 63 legislators, many of them freshmen, will meet in Carson City to grapple with what is expected to be a $3 billion shortfall. That’s $3 billion out of a $6.5 billion, two-year general fund budget.

Perhaps by then, with the benefit of hindsight, the recession will have been declared over. That won’t make lawmakers’ jobs any easier, however. Our new governor and legislators will still have to agree upon a multibillion-dollar combination of cuts and increased revenues to fund critical public services such as Medicaid, education and public safety.

The fiscal study the state commissioned last year, while unfinished, wouldn’t have shown us anything we didn’t already know: Nevada relies too heavily, and dangerously, on sales and gaming taxes.

Our employees are adversely affected by industry-specific taxes — and gaming employees, like construction employees, have already borne the brunt of the recession. Nor can we impose higher taxes, whether sales or room taxes, on our visitors.

Gone are the days when we can assume that tourist-based taxes will have no effect on visitation and spending. We have some of the highest hotel room taxes in the nation. Now is not the time to raise them even further.

It would be easy to concede defeat before beginning the fight. But in the political world, as in the economic, there are encouraging signs.

For the first time, Nevadans are thinking about how our state’s resources can be used to attract new businesses and industries. There are fiscal conservatives and Republicans discussing changes to our revenue structure. There are Democrats advocating spending reforms and budget cuts. Neither side is happy about it, but they’re talking.

For nearly 20 years Nevada consistently led the nation in growth. We may not lead it in recovery right now, but we can, and should, lead it in resilience.

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