Nevada Ranks 14th in Fiscal Health Report

We’re above average!
So says the Mercatus Center at George Mason University’s in its annual “Ranking the States by Fiscal Condition” report.
Based on states’ 2015 financial statements, Florida ranks first as the most fiscally healthy state, while New Jersey ranks the lowest. Nevada, in 14th place, ranks well overall, though other Mountain West states – Utah, Wyoming, and Idaho – rank higher, as this Mercatus Center table shows:
The fiscal health ranking of America’s 50 states rests on each state’s cash solvency, what and how much it taxes, the scope of public services it provides, its ability to attract businesses, and long-term debt, among other things. What are the biggest detractors from fiscal strength? The Mercatus report explains:

Growing long-term obligations for pensions and healthcare benefits continue to strain the finances of many state governments, and revenue drawn from volatile sources like oil production continues to threaten the fiscal health of top-performing states. Both trends highlight the fact that state policymakers must be vigilant to consider both the short-term and the long-term consequences of their decisions.

 Maryland, Kentucky, Massachusetts, Illinois, and New Jersey, all of which rank in the bottom five states, have relatively small amounts of cash in reserve, coupled with large debt obligations. That same ratio is problematic for millions of American households when their income takes a hit.
The metrics between states vary widely, creating a map that looks like this (dark teal indicates fiscally healthy states, lighter teal indicates moderately healthy states, and shades of orange indicate states that are not in great shape):
Screenshot 2017-08-16 12.59.47


On a short-run basis, Mercatus found that Nevada has between 1.98 and 3.39 times the cash needed to cover short-term obligations. Revenues exceed expenses by 6 percent. These are strengths, relative to other states.
Screenshot 2017-08-16 14.06.16

 Source: Mercatus Center

Total primary government debt is $3.51 billion, or 2.9 percent of state personal income, which is lower than the U.S. average.
Nevada’s long-term liabilities are 47 percent of total assets, though, or $1,967 per capita, a debt increase over both 2013 and 2014. Additionally, Nevada’s trust fund solvency – aka its “rainy day” fund balance – is ranked among the lowest in the country.
Unfunded pension obligations are $65.87 billion, or 54 percent of state personal income.
Note:  This year’s Mercatus study also highlights how recent changes in accounting standards affect what states reveal on their financial statements. Due to the implementation of new government accounting standards, states are reporting more of their pension liabilities, which increases the average long-term liability metrics.

Did You Know…?

Did you know that Las Vegas Sands and Wynn Resorts are more Asian than American in terms of their revenue? And did you know that among the MGM properties, Bellagio produces more than four times the revenue of the Monte Carlo or New York New York? This is the kind of data we live for here at the Stat Pack, so without further ado here is a table showing from where Nevada’s major gaming companies pull their revenue:


Gross gaming revenues (GGR) for Macau for the month of July dropped fell 4.5% on an annual basis, the 26th consecutive month of decline. GGR for the first seven months of 2016 dropped 10.5% year over year. Most analysts attribute the decline to a crackdown on corruption in China along with tighter visa policies and a smoking ban on large gaming floors. Into the Macau gaming mix, as of August 23rd, will be added the new Wynn Palace:

wynn macau

Anyhow, here is our second did-you-know item, a comparison of MGM revenue by property, as well as a look at their out-of-state and China operations: MGM actuals Nevada gambling revenues in June increased 6.8% from the same year-ago period. Casino revenues on the Las Vegas Strip – which accounts for more than half of Nevada’s total revenue – were up 9.7% year over year in May. Reno also recorded a 4.5% rise in casino revenues.

Nevada’s Real Unemployment Rate

Whenever a breathless headline about Nevada’s U-3 or “headline” unemployment rate breaks, the RCG Economics team takes a deep breath and digs a little deeper.
The U-3 jobless rate is the one most commonly reported by the news media. It represents the total unemployed persons as a percent of the civilian labor force. In Nevada in June, the rate was a seasonally-adjusted 6.4%.
Sounds pretty good, in light of where we’ve been, right?
Yes – and no.
The U-6 unemployment rate – a fuller measure of unemployment that includes unemployed, marginally attached, and forced part-time workers – is the number most economists tend to watch most closely.
In Nevada in Q2 2016, the U-6 rate was 13.1%. This is a decline of 0.3 points from Q1, so there has been progress, but it still remains the nation’s highest.
 Some economists say that all other factors aside, the U-6 rate should be roughly twice that of the U-3 rate. In Nevada, where the U-3 rate is 6.4%, an economist of that stripe would look for a U-6 rate of around 12.8%. Our rate is slightly higher than that, but not substantially so.
Other economists say that a U-6 rate of 7% to 8% would indicate a full jobs recovery, regardless of the headline rate. Our rate has a long way to go to reach that point.
Either way, the closer Nevada gets to a single-digit U-6 number, the better we can say our jobs market is doing. At the very least, we should look to match or beat the national U-6 number which in Q2 was 9.9%.
So, how is Nevada doing compared to other Mountain West states and the rest of the U.S.?
RCG’s latest post on our blog, Nevada by the Numbers, shows how Nevada’s U-6 rate looks in comparison to the rest of the nation as well as to other Mountain West states.
Below are three graphs we created for context (click each graph to enlarge).
Nevada’s U-6 rate ranks worst among states and is 3.2 percentage points lower than the U.S. average:
Nevada’s U-6 ranks last among the Mountain West states as well and is 5.8 percentage points lower than Colorado’s rate:
Finally, the below graph shows the percentage change in the U-6 rate by state between Q2 2015 and Q2 2016:

u-6 change graph

 Nevada is in the top five in terms of the rate of improvement.
This is largely a function of how high the state’s U-6 rate remains and in that way is similar to the grade school award for “most improved.”

Nevada Among Top 10 States For Low Federal Regulatory Burdens

For once, Nevada is near the bottom of a list we wouldn’t want to top. A new report from the Mercatus Center at George Mason University ranks the Battle Born state 42nd in the U.S. for the negative impact of federal regulations on the state’s economy.
The federal regulation and state enterprise (FRASE) index enlisted by Mercatus ranks the 50 states and the District of Columbia according to how federal regulations affect each state’s economy. Although federal mandates apply in the same way in all states, each state’s economy includes a unique mix of industries. As a result, federal policies that target specific sectors of the economy can and do affect states in different ways.
Nevada was in either 50th or 49th place among states from 2003 to 2008, climbed up to 39th in 2012, then dropped to 42nd in 2013. Nevada’s FRASE score for 2013, the last year for which data is available, is 0.83, putting the state below the average for federal regulatory impact. The chart below shows Nevada’s scores for the last 10 years:

Historical FRASE Ranks and Scores for Nevada


Source: Mercatus Center

One of the reasons for Nevada’s desirable score is that the accommodation (hotel/motel) industry has relatively few federal restrictions and makes up a significant portion of the state’s economy. The accommodation sector makes up 12. 4 percent of the state’s total private sector value, well above the national average of 0.9 percent, but the industry has only 1,538 federal restrictions (as measured by FRASE), well below the median of 6,165 for a given sector.
Retail and mining, two of Nevada’s top 5 industries, both have above-average regulation and economic impact. Mining regulations are the greatest contributor to Nevada’s FRASE score.
The state’s top industry, real estate, is 0.7 points below the national average in terms of economic share. With a regulatory burden just below median at 6,014 federal restrictions, this sector does not have a significant impact on Nevada’s score.
The two figures below provide an easily comprehensible snapshot of Nevada’s largest industries, as a percentage of private sector economic value, as well as a snapshot of the number of federal regulations for each sector.

Source: Mercatus Center

Note that Nevada’s fifth largest sector, covering professional, scientific, and technical services, has the highest number of federal mandates:
Regional Findings
The portions of the South and Midwest that make up “Middle America” are home to some of the highest regulatory burdens, driven primarily by the importance of, and restrictions on, resource extraction and energy development. The Mountain West fares far better as a region, with Nevada coming out on top.
The figure below shows which states and regions have the highest and lowest regulatory burdens.

Source: Mercatus Center

Other Western States
California ranks 29th nationally, with chemical products manufacturing contributing the most to their score despite not being one of their top five industries. The state is also above the national average in regulation-heavy professional and technical services, but their massive real estate and computer products industries are restricted at levels very close to the median.
Arizona fares slightly worse than Nevada, coming in 40th place. Utilities are the top contributor to their score, though like California this is not one of their top industries.
Utah is ranked 31st, and while professional and technical services are the main factor, their credit intermediation industry stands out as a heavily-restricted and extra-weighted sector in the state.
Colorado rounds out the region in 34th, driven by professional and technical services restrictions and a larger broadcast and telecommunications industry.
Oregon is the only state in the West faring better than Nevada, coming in 46th place.
Below is a graph showing the general trends in the FRASE index in the four U.S. census regions in recent years:

Source: Mercatus Center

A Brief History of Federal Regulation
Over the past 80 years, the federal government has increasingly relied on regulations as its primary legal output. In 2014, Congress enacted 223 laws, while federal agencies issued 3,554 final new rules in the Federal Register.
The most recent edition of the Code of Federal Regulations (CFR) contains more than 175,000 pages and one million individual restrictions that mandate or prohibit some activity. The number of federal regulatory restrictions has almost doubled since 1975, as shown in the following graph:
The most-regulated industries nationally are closely linked to energy, transportation, and fuel, along with finance and pharmaceuticals. Surprisingly, fishing also makes it into the top 10, as shown in the table below.

Source: Mercatus Center

FRASE uses RegData, a dataset that quantifies federal regulations by identifying individual regulatory restrictions in the CFR and estimating their relevance to different industries. FRASE weights the number of restrictions targeting each industry according to its importance to a particular state compared to the nation as a whole. If an industry contributes twice as much to the state’s economy as it does to the nation’s, the restrictions count twice as much.
A FRASE index of 1 means that federal regulations affect a state at the same level they do the nation as a whole. A score higher than 1 means federal regulations have a higher impact on the state than on the nation, while a score below than 1 means they have less impact.
Read the full report, glance over the methodology, and access the full RegData here.

Nevada Among States with Tax Revenue Recovery

Southern Nevada’s real estate industry is being resurrected, via Vegas Inc.
As we pointed out last week, Reno-Sparks home prices hit a 10-year high for November.
Gigabit, Reno-Sparks, and the economic fast lane.
Single parents are now raising more than one third of U.S. children. Nevada is among the states with a percentage at or above 39:


How much do you know about Southern Nevada Strong, the new collaborative regional planning effort?
Crown Resorts’ Las Vegas Project a Risky Gamble for Packer.
Who is Jia Yueting, the Chinese billionaire linked to Faraday?
Tax revenue has now recovered in a majority of states, per Pew. Map:
According to WalletHub, Southern Nevada has the lowest number of homeless people per capita.
UNLV ranks as one of the schools from which the most NBA players come.

Silver State Links

Reno to get three daily nonstop flights to Oakland.
Average credit card debt, student debt, and mortgage debt, by state (scroll down). Nevada is 13th for mortgage debt ($188,410), 16th for credit card debt ($3,898), and 48th for student loan debt ($21,666).
Negative equity in states like Nevada is dragging down national housing numbers. The largest share of underwater homeowners:

  1. Las Vegas, NV – 22.1 percent
  2. Chicago, IL – 20.6 percent
  3. Atlanta, GA – 18.6 percent
  4. St. Louis, MO – 17.6 percent
  5. Baltimore, MD – 16.9 percent

A Nevada housing market prediction.

Cloud Campus: Size Matters

Switch SUPERNAP campus is the largest cloud campus in the U.S.
SolarCity opens a regional workforce training center in west Las Vegas.
If Las Vegas air traffic is your defining metric, the U.S. economy is doing well:


The latest jobs report from RCG Economics is out. Feel free to commit it to memory and amaze your friends and colleagues with your knowledge of the numbers.
A $9 million poker player’s mansion hits the market in Las Vegas.
Big investment interest in the Las Vegas of Spain.
The RJ’s Howard Stutz on this year’s changes to Nevada gaming law.
Should your team switch to a virtual office?

Las Vegas Is On a Lucky Streak

Amazon same-day holiday delivery is coming to Las Vegas.
If you’re an Amazon Prime member, they are already delivering groceries and other goods in some parts of the valley. (Enter your zip code on that linked page to see whether you’re in a service area.)
The New York Times says Las Vegas is on a lucky streak for developers.
Median single family home list prices for various U.S. cities including Las Vegas:
Great stats on the 106,469 graduates of UNLV.
An in-depth piece on Reno contains some amusing sentences. Enjoy.
The 9th Circuit Court finds Reno’s city council election system unconstitutional.
The Las Vegas City Council has approved half a gaming license sought by tavern operator Dotty’s for a new location.

Brought to You by the Letter F

From an F in transparency to falling Reno house prices to a big fat fail in veteran support systems rankings, Nevada’s good news is peppered with with some not so fabulous facts.
Reno-Sparks home prices fall for the third month in a row.
Reno’s Nixon mansion has been reduced to a mere $16,400,000:


Also, what happened to Reno’s shadow housing inventory?
This deal will remake SLS hotel tower into W Las Vegas.
Treasure Island owner says MGM Resorts rejected a $1.3B offer for Mirage.
Our initial unemployment insurance claims are on a long-term downtrend.


Source: @NVlabormarket

The October Job Flash report from RCG Economics is out. Read. Learn. Share.
Vegas real estate stats.
The American Gaming Association is going to study sports betting laws. (MGM Chair Jim Murren is quoted in the piece.)
Slot giant IGT had a great Q3.
Nevada ranks among the worst states for transparency and accountability: 

Source: Center for Public Integrity (CIR)

Here’s the full CIR report.
A Nevada poll on solar energy metering.
In other resource news, Nevada has the smallest allocation of Lake Mead water:
Who is this From an F in transparency to falling Reno house prices to a big fat fail in veteran support systems rankings, Nevada’s good news is peppered with with some not so fabulous facts.
What is this Faraday company that everyone is talking about in North Las Vegas?
They are taking on Tesla with a $1 billion investment.
Nevada has a lot of veterans. Thank you to each and every one of them!
Of the 21 million military veterans living in the U.S., about 400,000 are unemployed. The best and worst cities for veterans (Las Vegas is ranked 80th out of 100), from Wallet Hub:

Reno Housing Boom, Las Vegas Water Hogs

Las Vegas’ largest water users.
Why Reno may be America’s next housing boomtown.
What’s next in addressing Nevada’s teacher shortage?
Proposed international trade center could bring the world to North Las Vegas.
Highest recorded gas prices by state:


Source: AAA

Co-publisher of the Stat Pack and HighTower Partner & Managing Director Mike PeQueen got an Alum of the Year Award from UNLV.
ICYMI, nine surprising things about Nevada’s population.
Nevada metro gas prices end three-week slide.
Fitch Ratings has affirmed the ratings of Clark County and McCarran.
Las Vegas taxi industry launches its own ride-hailing app.
Las Vegas is among the cities least likely to survive the zombie apocalypse.
MGM Resorts’ Murren on the prospect of charging for parking.
UNLV plans to talk to the county about 38 acres near proposed stadium site.