Economically stressed out

Friday, May 7, 2010 | 3 a.m.

It came as little surprise last month when Nevada was ranked the nation’s most economically stressed state in the monthly Associated Press Economic Stress Index.

Nevada leads the ranks due to its high foreclosure and unemployment rates, with joblessness hitting a record 13.4 percent in March.

And three Nevada counties are among the top 20 most stressed in the analysis of February data.

Lyon County had a score of 28.42, putting it in the No. 2 spot on the national list. Nye County came in 10th on the list of counties, with a score of 24.4, and Clark County was No. 17, with a score of 22.81.

The AP’s Economic Stress Index found the average county’s score in February was 11.8.

The index calculates a score from 1 to 100 based on a county’s unemployment, foreclosure and bankruptcy rates. A higher score indicates more stress. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11.

Nevada has been hit hard by the subprime mortgage meltdown, a reduction in visitation to its casino resorts because of the U.S. recession and waves of layoffs in the construction industry as development has nearly ground to a halt.

What’s obvious about the current recession is that states and cities with more diversified economies are doing better than Nevada and Las Vegas, which for too long have been overly dependent on the gaming, real estate and construction industries.

Las Vegas economic analyst John Restrepo, for instance, has pointed out that while Phoenix has been slammed by foreclosures just like Las Vegas, its unemployment rate has been running about 4 percentage points lower than the Las Vegas rate.

We’ve repeatedly said the economic crisis facing Las Vegas and Nevada continues to highlight the urgent need to diversify our economy.

But don’t take our word for it. As reported April 23 by In Business Las Vegas reporter Buck Wargo, local government economic development officials in the Las Vegas Valley made these troubling comments during an April 14 forum:

Mike Majewski, North Las Vegas’ development director: “We pay economic development a lot of lip service. We are paying the price now in a lack of diversification.”

Bob Cooper, Henderson’s economic development manager: “On my wish list would be to fund higher education so we are comparable to other states. We are so far underfunded that we don’t have the ability to compete on a level playing field.”

Along with economic development officers for the city of Las Vegas and Clark County, these officials generally said they have limited budgets for economic development and attracting firms. They pointed out the state doesn’t spend a lot of money in that endeavor, which means it doesn’t generate a lot of leads.

And even when leads are generated, why would responsible business owners want to move to a state with a marked lack of commitment to properly fund its public schools and colleges and universities?

Opportunities abound for Nevada if this structural problem can be corrected.

For instance, there are encouraging signs Nevada can become a center for renewable energy — solar, wind and geothermal power.

As Nevadans in record numbers struggle with unemployment and foreclosures, policymakers and candidates for state office this year should be focused on economic diversification and facing up to the fact that other states are doing more to make themselves attractive to business investment.

As part of that focus, they need to tell us how they will fix the key factor limiting the state’s ability to compete for new businesses: lack of support for education.

The most recent figures comparing spending by school districts show that in 2006-07, the Clark County School District’s budget amounted to spending of $7,791 per pupil — well off the average spending by large districts around the country of $9,323.

In the Los Angeles area, a competitor for solar companies and other firms, the spending averaged $10,430 per student. In Phoenix and Scottsdale, also competitors to Las Vegas, the spending was also higher per student at between $8,233 and $9,589.

Clearly, Nevada and the Las Vegas area have to better support education if we’re going to make sustained improvements to our economy.