There has been a lot of talk in the local and national news about Nevada’s budget shortfall. Many are wondering what the problem is or why Nevada is suffering. I do not think I have the exact answer, but as a Reno CPA who has been working with finances for a while I think I have an idea.
I think the simple answer is that Nevada’s economy is not diversified. Historically we, as a state have relied on three main industries. These industries are gaming, mining and construction. As a state, we have looked to these industries to provide a vast majority of our tax share for the state. The problem with doing this is that when one industry fails or suffers then the others have to pick up the slack. The bigger problem is, when more than one of these areas is suffering. As a Reno CPA, I am always looking for ways to help the businesses I work with stay diversified.
In Nevada, the gaming industry is definitely down. One reason for this decline is that over the years gaming has spread to 49 of the 50 states. Therefore, we are capturing a much smaller percentage of the gaming shares. In addition, the current state of the economy is not helping the gaming industry.
Turing to construction, I believe Nevada has seen the largest decrease in construction in the nation. This is because we had such a run of it for so many years, but when the economy fell, so did the construction industry. In fact, I do not think we will see a decent return in construction for another three years.
Conversely, mining is high. Gold prices are extremely high. Due to the decrease in the other areas and the increase in mining Nevada is looking towards the mining industry to provide a lot of the tax revenue. This dependence on one industry for tax relief is not enough for the state.
As a Reno CPA, I think that one way to help the Nevada economy is to push for diversification. It is not a republican problem. It is not a democrat problem. It is an overall economic problem, which can be helped by not relying so heavily on these three industries.
Reno’s Best CPA,