Nevada sales tax revenues increase

Spending stumbled nationwide in May, but Nevada didn't get the memo.

Sales of tangible goods by Nevada merchants totaled $3.71 billion in the month, up 10.4 percent from $3.36 billion in May 2011, the state Taxation Department said Friday. About two-thirds of the increase came in Clark County, where sales jumped to $2.71 billion, up 10 percent from $2.47 billion in May 2011. Spending nationwide was flat in May, the U.S. Commerce Department reported in June.

The state's gains weren't out of line with increases during the recovery. Four of the past 12 months have shown sales spikes in or near the double digits. But the figures surprised one economist given the national weakness.

Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said consumer spending slipped nationwide in the second quarter. That should mean bad news for Nevada because the state relies on tourists' discretionary spending. Visitor growth did slow in the second quarter, with April's decline of 0.9 percent breaking a two-year streak of gains. Visitors also spent less on gambling in the quarter, with Strip gaming revenues falling 18 percent in May.

But locals seemed to pick up where visitors slacked off.

Sales among car dealers surged 21 percent in May, while clothing stores saw an 8.7 percent sales jump. Even some of the inessentials spiked: Bars and restaurants posted an 8.5 percent sales gain.

"Basically, what we're looking at is consumers who've kind of reached the end of the clothes they had, or reached the end of the cars they had," Brown said. "Consumers are weary of the recession and bouncing back on spending."

They haven't bounced back enough to carry sales to pre-recession rates. Taxable sales were 11.1 percent off of their county high for May of $3.1 billion, and 9.7 percent below a statewide peak of $4.1 billion, both May records set in 2007.

Nor will Nevada return to those levels anytime soon. Not only would visitors need to spend more, but locals' incomes would have to return to pre-downturn numbers, Brown said. That's not likely in the near term. The recession erased 14.5 percent of Nevada's job base, and just 12.4 percent of those lost jobs have come back. What's more, personal income in Nevada remains 2.7 percent below pre-recession highs, Brown said.

Construction-related sales gained 6.8 percent statewide but fell 22.9 percent locally, driven down by a steep decline in heavy and civil engineering construction such as infrastructure projects. Still, the market saw improvements in the specialty-trades category, which includes electrical, plumbing and heating and cooling contractors. Brown noted that broader construction measures, such as the number of building permits issued, is also rising, pointing to "general improvement" in the sector.

Gross revenue collections from sales and use taxes were $288.94 million in May, up 8.9 percent when compared with a year earlier.

Contact reporter Jennifer Robison at jrobison@review or 702-380-4512. Follow @J_Robison1 on Twitter.