May sales soft for state businesses

CARSON CITY -- Nevada's economy continued to sputter in May as business sales of taxable goods dropped 1.5 percent from May 2007, according to a report released Tuesday by the state Department of Taxation.

Through the first 11 months of the fiscal year, sales in Nevada are off 2.1 percent from the same period a year earlier.

The report was just more bad news for a state already reeling from growing unemployment and falling gaming revenues.

Since the Legislature concluded its special session on June 27 by cutting state spending by $275 million, the Nevada unemployment rate has risen to a 14-year high of 6.4 percent and gaming has gone through its worst month in at least 10 years, with gaming tax receipts dropping 22 percent.

However, Gov. Jim Gibbons said the lower-than-expected sales tax revenue won't require any "immediate adjustments" to the state budget.

"The sales and use tax collections for the month of May confirm what we have already seen from other economic indicators, that Nevada's economy struggled during the second quarter of 2008," Gibbons said in a statement.

"Nevada continues to see strong construction activity in the south and a modest increase in consumer spending," Gibbons said.

Gibbons and the Legislature have cut state spending by a total of $1.2 billion since January. The cuts come on the state's two-year budget that ends June 30.

In 12 of the last 14 months, sales tax revenue has declined compared to the same month a year earlier. The two months where increases were reported had gains of less than 1 percent.

In May, businesses sold goods valued at $4.05 billion, dropping 1.5 percent, although actual sales tax receipts for the month were off by 3.87 percent.

That was $3.1 million less than the state Economic Forum projected when it met on June 20.

For the first 11 months of the fiscal year, state sales tax receipts were $881 million, or 3.3 percent less than the $911 million collected during the same period the previous year.

The bright sectors of the economy included accommodations, up 21 percent; construction industry sales, up 16.2 percent, and sales at food and beverage stores, up 7.6 percent.

One of the biggest declines was in automobile and auto parts sales, down 14.8 percent to $436.4 million.

During May, businesses in 10 of the state's 17 counties reported declines in taxable sales.

Clark County businesses sold goods worth $3.031 billion, down 0.5 percent, while Washoe County sales were $554 million, down 6.2 percent.

Since July 2007, only businesses in Humboldt, Lyon, Mineral and Lincoln counties have reported overall increases in business sales.

Contact Capital Bureau Chief Ed Vogel at or 775-687-3901.