Tax collections for local governments have been negatively influenced by
declining taxable sales and gaming revenues, in addition to slowdowns in
vehicle registrations, real property transfers, and falling hotel
occupancies and average daily room rates. State and local budget cuts
have been implemented and reserves have been materially reduced. Many of
these cuts, however, utilized one-time funding sources, threatening the
state’s ability to maintain essential service levels into the next fiscal
years when those one-time monies must be replaced with recurring revenue
sources. According to the latest statistics released by the Nevada
Department of Taxation, taxable retail sales activity totaled $9.0 billion
during the trailing three-months ending July 2008. This translated into a
2.2-percent decrease in taxable retail sales for Clark County when compared
to the same three-month period in the previous year. The largest retail
sales category, food service and drinking places, posted a decrease of 6.3
percent when compared to the same timeframe in the previous year, although
collections were impacted by the Nevada Supreme Court’s ruling that the
"use" portion of the tax is no longer required on “comped” food and
beverage. Motor vehicle sales, the second-largest contributor to aggregate
retail sales volumes, also reported a 7.9-percent decrease. This is the
second lowest reported sales value for this category within the last three
years.
Commercial construction, buoyed by significant investments in the
hotel-casino sector, continued to bolster taxable sales collections during
the quarter. Construction of buildings and specialty trade contractor
categories in particular, posted quarterly gains of 45.8 percent and 37.5
percent, respectively, from the same 3-month period previous year.
Inflation-adjusted per-capita spending in Clark County declined by 6.4
percent when compared to the same three months of the prior year (ending
July 2007). With current expectations likely to influence the future
longer-run sales, we expect per-capita spending growth to remain soft as the
housing market continues its current trend and impact on resident spending.
In addition, we anticipate expansions in the employment sector to be softer
than in previous years, also affecting spending.
Clark County’s consolidated tax distributions for the three-month period
ending July 2008 (most recent data available) amounted to $225.5 million,
representing a 6.8-percent decrease when compared to the same period in
2007. Annual comparisons for Clark County liquor tax revenues were up 0.1
percent when compared to the same period of the previous year, while
cigarette tax collected in Clark County reported a 4.7-percent decrease
during the same three-month period.
Motor Vehicle Privilege taxes, which stem from vehicle registration
payments, were down 3.9-percent year-over-year. During the past 12-months a
total of $106.1 million was collected, representing a 0.7-percent decrease
when compared to the $106.7 million collected in the same 12-months of the
previous year. Continued declines are expected as less sales activity make
vehicle depreciation the stronger force. Real property transfer tax revenues
amounted to $7.1 million at the end of second quarter 2008 (latest data
available). This represents a significant increase from the previous quarter
(18.1 percent); however, substantially less than the collections during the
same quarter of the prior year (-27.1 percent).
From a gaming perspective, gross gaming revenues for Clark County fell 7.7
percent year-over-year for the trailing 3-months ending August 2008. The Las
Vegas Strip, which accounted for 63.1 percent of Clark County gaming
revenues during the past twelve months, reported annual declines of 8.8
percent.
It remains clear that consumer spending has significantly cut back when
compared to previous quarters. Residents have experienced a decline in their
perceived value within their investment portfolios, retirement plans, as
well as any real estate properties owned. With that said, consumers are
hesitating to spend, and will therefore directly affect the overall fiscal
collections and monies collected by the local government. |
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CURRENT QUARTER
INDICATOR BRIEF: |
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FISCAL
HIGHLIGHTS: |
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1. |
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Taxable sales for the three months ending July 2008 were $9 billion, down 2.9
percent over the same period in 2007 |
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2. |
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The largest taxable category, food beverage and drinking places posted a
6.3-percent decrease |
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3. |
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Clark County consolidated tax distributions were down 6.8 percent for the three
months ending July 2008 |
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4. |
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Gross gaming revenues were down 7.7 percent for the trailing 3-month total
ending August 2008 |
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