Charting a course

Friday, Dec. 3, 2010 | 2:01 a.m.

There has been a drumbeat of bad economic news in the state over the past few years — Nevada has the highest unemployment rate in the nation, not to mention the highest rate of foreclosures, and the leading economic indicators have been sluggish — at best.

Now comes this: Las Vegas’ economic performance is the fifth worst of 150 major metropolitan areas around the world, according to a study by the Brookings Institution and the London School of Economics. Before the Great Recession, Las Vegas’ economy was the 14th best performing, and during the recession it sank to 128th and now it is 146th.

Other areas are recovering more quickly than Las Vegas. Phoenix, for example, was 20th in economic performance before the recession began and slipped to 114th during it. Phoenix has since rebounded to 68th.

Economic analysts don’t expect Las Vegas’ once “bulletproof” economy to rebound quickly, as the Las Vegas Sun’s Buck Wargo reported this week.

“The betting man would say if you’re expecting the U.S. economy to rebound in a way that’s going to lead to a quick, strong rebound in Las Vegas, you probably better place your bets elsewhere,” study author Alan Berube of the Brookings Institution said. “It’s going to be awhile, and this is an opportunity to rethink the growth model. What got Las Vegas to where it was in 2006 is not what will get it to a better place by 2020.”

The study says Las Vegas has several issues slowing its recovery, such as the high foreclosure rate, the lack of economic diversity and a relatively poorly educated workforce. Las Vegas’ economy had been paced by tourism and construction, and those are expected to return slowly.

“The economy that Las Vegas had before the recession is not a recipe for growth in the new economy,” Berube said. “There has been talk about the need to diversify and find new sources of economic growth, and that is imperative in the long run.”

As we have said before, a broad discussion about Nevada’s future is needed, particularly in the face of serious budget problems. The Economic Forum, the panel that forecasts state revenue, estimated this week that Nevada will have $1.1 billion less for the upcoming two-year budget cycle than it does in the current budget. But to maintain current service levels, the state will need nearly $3 billion because it won’t have the additional revenue — from federal stimulus money and temporary tax increases — that helped balance the current budget.

Although the numbers are stunning, budget problems aren’t new. The state has a broken and inequitable tax system. As a result, the state repeatedly has problems funding schools, infrastructure and essential services — all things that need to be improved, particularly if Nevada is to diversify its economy.

Unfortunately, in past budget crunches, former governors and lawmakers made short-term choices — they balanced the budget, but pushed off the fundamental problems for a brighter day. But that day hasn’t come, and the procrastination has only compounded the state’s problems.

Certainly, the budget will be a priority for Gov.-elect Brian Sandoval and the Legislature next year, but they should take the time to chart a long-term course for the state. Nevada can’t afford to push the problems off anymore — it needs a positive vision and strong leadership in Carson City to pave the way for a better economy and a brighter future.