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Bumps in the Road

The economy sometimes force unpleasant decisions

by Bill Bible

What is becoming increasingly apparent to resort companies, economists and financial analysts around the country is that the 2008 economic outlook is bumpy at best. With the high rate of home foreclosures, high energy costs and decrease in discretionary income, people are feeling the pinch and do not have the same budget available for entertainment. For those that do make their way to Nevada’s casinos, chances are they won’t be able to spend as much as they did last year.

Revenue forecasters expect that gaming and resort revenue will be less in 2008 and we are already seeing the effects through some reductions in staffing. It is never easy for any manager or company to make the tough decision to lay off employees. Many employees think that it is just a way for the company to save a few dollars but that is simply not the case. Companies spend time, money and energy training qualified, quality people.

Simply put, employees do the jobs that are essential to the company’s welfare. The last option for most companies is layoffs. I am sure you have read in the newspaper or heard in the break room about impending or recent layoffs. Unfortunately for some companies, employee layoffs are their only option as they struggle to address lower revenues. Hopefully this will be short-lived.

As gross gaming revenues decline so do state gaming tax revenues. Nevada is already experiencing a significant budget shortage due to a softening economy and reductions in both sales and gaming tax revenues. These reductions are important to note because the industry is currently being targeted by the teachers union for a 44 percent increase in the gross gaming tax.

From an economic view, relying more heavily on the gaming industry—which already generates about 50 percent of the state’s revenues—to finance even more of the state budget is bad tax policy. And further increasing the industry’s tax burden is a bad idea that could significantly impact the financial health of the industry.

With the arrival of economic storm clouds, now is not the time to support any reckless proposals that increase anyone’s taxes by 44 percent.

Casino Connection Nevada contributing editor Bill Bible is the president of the Nevada Resort Association. Bible has a long history with the state of Nevada and the gaming industry. He has served as a controller for Nevada, the chairman of the state Gaming Control Board, and a member of the National Gambling Impact Study Commission.