Right-sizing Nevada

For a while, Nevada had aspirations. From 1985, let's say, until just recently, Nevada embraced the lofty notion that it could become a state of standing and quality, shedding its lingering reputation as a hinterland of sin, corruption and atomic explosions.

And for a while, Nevada made strides. Fueled by ambition and the proceeds of tourism and growth, the state and its major cities started creating the public facilities and civic institutions commonly identified as the building blocks of modern American life.

Streets and highways, schools and universities, social service programs and medical services, parks and cultural centers -- Nevada raced to catch up with and even surpass the achievements of other states. And the nation took notice, grudgingly acknowledging that Nevada was emerging as something more than a free zone to indulge in man's most popular vices.

Nevada's massive improvement plan enjoyed bipartisan support, as the economic boom allowed the state to do big things without imposing a heavy tax burden on its people or businesses. Nevada was on a roll, beating the house again and again.

But in the words of the Western writer Bret Harte, "The only sure thing about luck is that it will change."

Nevada's luck changed with the onset of the Great Recession. The state's main industries -- tourism and development -- were devastated. The mortgage crisis hit Las Vegas as hard as anyplace in the country. The global recession took a large bite out of the casinos, which, saddled with debt, weren't prepared to handle the downturn. High unemployment and bankruptcy rates have left the state wondering when it will hit bottom.

How could this happen to Nevada, one of the nation's rising stars of the 21st century?

Nevada could have done some things differently to ease the recession's effects. For decades, Nevada's political leaders failed to reform the tax structure, even as they gave lip service to the need to do so. When times were good, it always seemed like tax reform could be put off until later.

Nevada also failed to diversify its economy. Again, the need to attract new industries was widely recognized, but efforts to make it happen were modest at best. Diversification never reached the top of the priority list because the state was so busy feeding off the largesse generated by gaming and construction.

These failures are definitely factors in Nevada's recent decline, but most of the mess can't be blamed on the state's lack of leadership or vision. Most of it is the byproduct of a national real estate collapse and a global recession that Nevada could not prevent or avoid.

The result is a humbled Nevada. A state struggling to deal with rising budget deficits. A state wondering whether it can ever regain its swagger.

Over the next few years, Nevada will be in a period of painful retrenchment. The recent legislative special session that cut several hundred million dollars from the budget, and the county and city decisions to lay off workers and cut services, are only the beginning. The 2011 Legislature will face an even larger deficit, perhaps $3 billion, and will have to make excruciating decisions about what to keep and what to kill.

Deep cuts in education will have the most destructive long-range effects. Good schools, from kindergarten through college, produce what former Labor Secrectary Robert Reich calls the human capital vital to keeping the country in the forefront of progress. Reich has called for an education bailout, which he believes would be far more important and effective than the Wall Street bailout of 2008-09. But it's probably not going to happen -- the nation's schools never would be characterized as "too big to fail."

In Nevada, we have entered an era of diminished expectations. With decimated school budgets, efforts to diversify the economy are crushed. Companies looking to relocate prefer places that can deliver an educated work force.

Meanwhile, in the current political climate, it will be nearly impossible to muster enough votes to pass meaningful tax reform. As a result, Nevada will continue to balance its budget through a patchwork of fee hikes, gimmicks and painful cuts.

Nevada eventually will emerge from these doldrums, and the economic engines will rumble to life. But it's going to take a long time to climb out of the hole we're in, and we're not likely to see another boom rivaling the 1989-2006 period.

Instead, we're going to enter a "new normal," characterized by slower growth and more realistic expectations. My hope is we'll become more deliberative and focused on long-range goals. Profit-harvesting at Nevada's expense will be frowned upon rather than applauded. Instead of trying to do everything, our universities will do fewer things but do them well. Growth will be balanced with quality and conservation. Local needs will be given as much consideration as those of tourists.

For several decades, Nevada considered itself a slugger swinging for the fences. But the hall of fame is full of singles hitters with high batting averages. That's what we want to be.

Geoff Schumacher (gschumacher@reviewjournal.com) is the Review-Journal's director of community publications. His column appears Friday.