Why Las Vegas Has Been Slow To Recover From Volatile Times

The Great Recession may have officially ended in 2009, but the city of Las Vegas’ coffers continued to feel its effects for several years. Numbers from the Pew Charitable Trusts American Cities project shows Las Vegas’ recovery is slower than that of most of the country.

Mary Murphy is the author of “Recovering from Volatile Times” for the Pew Charitable Trusts. She told KNPR’s State of Nevada that Las Vegas is not alone and several large cities are still struggling to get out of the impact of the recession.

“For many of these large cities, challenges really persisted and these cities aren’t out of the woods yet even several years after the end of the national recession,“ Murphy said.

She said property tax collection is a big factor for why cities are hurting for money.

However, Murphy said cities are still feeling that pinch years after the end of the recession because property tax collection lags behind other economic indicators by 18 to 24 months. Because the housing crisis played such a significant role in the recession, many cities didn’t feel the problems until 2010 or 2011.

“The combination of those dynamics, of reduced state aid and losses in property tax collection has really had a substantial impact on city budgets.”

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While several large cities, from San Diego to Kansas City, Missouri to Miami are still struggling, those hit particularly hard by the housing bust are hurting the most.

“Las Vegas, like a handful of other large cities, was still seeing declines in total governmental revenue and part of that story is continued losses in property tax collection as the impact of the housing crisis are still playing out,” Murphy said.

Nevada’s cap on property taxes is part of the problem for local cities. During the housing boom, property taxes were capped because as property values soared, so did taxes.

Now, property taxes on residential properties can’t go up more than three percent per year and for rental and commercial properties, they can’t go up more than three to eight percent. However, when the bust happened, income from property taxes dropped dramatically and now with the cap that revenue can’t be regained.

Principal analyst with Applied Analysis Jeremy Aguero said that drop in property taxes has cost the state millions of dollars.

“If we look at what those abatements are costing the state today, they’re costing the state of Nevada more than $600 million, $250 million plus would have otherwise gone to school districts like the Clark County School District,” Aguero said.

He said that is almost the amount of money Gov. Brian Sandoval is trying to raise for education in this legislative session. He said the caps have taken what were historically one of the most stable source of revenue and made it unstable.

He said besides changing the tax structure the state needs to diversify its economy and improve education to see local revenue improve.

“Our economy continues to be among the narrowest in the nation of our size, which is going to problematic,” Aguero said.

Murphy can’t say how long the recovery for the nation’s cities will take, but it is expected to be a long, slow process.

“Many analysts continue to talk that this will be a slow recovery for many major cities and Las Vegas may be among them,” Murphy said.



Mary Murphy, officer, The Pew Charitable Trusts America Cities project; Jeremy Aguero, principal analyst, Applied Analysis

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