Improving the economy

Friday, Jan. 29, 2010 | 2:06 a.m.

Economic diversification in Nevada has been on the public agendas of many elected and civic leaders for decades. Unfortunately, those efforts haven’t made great inroads and it is obvious in Southern Nevada.

In a study done for the Las Vegas Convention and Visitors Authority, Applied Analysis, a local consulting firm, compared major metropolitan areas across the country and concluded that Southern Nevada may have the “most tourism-dependent economy.”

As Richard N. Velotta reported in the Las Vegas Sun, nearly 30 percent of Southern Nevada’s workforce is employed in the tourism and leisure industry, compared with just 10 percent nationwide. Orlando, which is one of Las Vegas’ main competitors for convention business and is known for tourism, has 19 percent of its employment in the industry. As well, leisure and tourism account for nearly 20 percent of the total gross domestic product in Southern Nevada. In Orlando, the tourism and leisure industry accounts for 10 percent of its gross domestic product, and nationwide the number is less than 4 percent.

“No matter how the data are carved or the final rankings ordered, Southern Nevada’s economy is remarkably dependent on its tourism sector,” Applied Analysis principal Jeremy Aguero wrote in the report. “This dependence appears to have lessened during the past decade; however, the region remains among the most tourism-dependent in the nation.”

This reliance on tourism is a major reason why the state is suffering as much as it is. As the nation’s economy is suffering and tourism is dropping, Nevada is taking a double hit.

Nevada has a low tax rate and consistently ranks as one of the most business friendly states in the nation, so why hasn’t it attracted more industry? Over the years there have been several efforts, including changes in the law, tax breaks and business parks to attract new industries, but few breakthroughs.

Part of the problem is that Nevada has not adequately funded education, and as a result, the workforce doesn’t have all the skills that many businesses can find in other states. Nor does Nevada have the infrastructure that other states offer. Moreover, the state hasn’t made economic diversification a priority.

Nevada’s efforts to attract tourists far outweigh what the state does to attract new businesses. Some will say the easy solution is to take more money from the LVCVA, as the Legislature has in the past, but doing so would only hurt efforts to retain what the state already has. Instead, the state should focus on ways to grow the economy, not take from tourism to add to other industry. State leaders must find ways to put more resources into diversification efforts, and the governor and state leaders should focus on preparing the state for the future.

The bottom line is that it is not sustainable for Nevada to continue to rely on tourism to the extent that it does.