Fuel-price drop seen as opening to set up I-11 funding

Should Nevada and Arizona be taking advantage of plunging gasoline prices to raise taxes to fund construction of Interstate 11?

An Arizona State University economist posited that suggestion Monday while assessing the economy of the Western states in the University of Nevada, Las Vegas’ biannual Economic Outlook forum.

Dennis Hoffman told the 100 people attending the session at M Resort that the drop in fuel prices may be the perfect time to establish a funding mechanism to build the interstate highway that would connect metropolitan Phoenix with Las Vegas. Prices at the pump have fallen 55 cents a gallon in Southern Nevada since December 2013 and are forecast tokeep dropping.

Hoffman said fuel prices in Phoenix are even lower than they are in Southern Nevada.

Phoenix and Las Vegas are the largest metropolitan areas not connected with an interstate highway and the state governments of Nevada and Arizona have endorsed the concept of upgrading U.S. Highway 93 to interstate highway specifications. Several business organizations, including the Las Vegas Metropolitan Chamber of Commerce, have backed the 300-mile, $5 billion project because of the economic benefits it would generate for tourism and commerce.

The Nevada Transportation Department and the Regional Transportation Commission of Southern Nevada already have signed on to build a 15-mile bypass of Boulder City that would be a part of the I-11 project in the state.

Hoffman’s mention wasn’t the only reference to falling gasoline prices.

Stephen Brown, director of the Center for Business and Economic Research at UNLV’s Lee Business School, said the four-year low in gasoline prices is acting like a mild economic stimulus for the nation with the average American household having an extra $2,400 a year to spend when gasoline hits its predicted low national average of $2.50 a gallon by January. He added that he expects the price to rise back to $2.75 a gallon by Memorial Day.

Chapman University economist Esmael Adibi, who reported Monday on California’s economic outlook, said many of those benefiting from the fuel price drop would make splurge purchases, including trips to Las Vegas.

As a result, Southern Nevada’s visitor volume and gross gaming revenue should rise in the future.

OPTIMISTIC OUTLOOK

Brown and Ryan Kennelly, an analyst at UNLV’s economic research center, painted a promising picture of the region’s tourism, gaming, construction and housing industries and the area’s employment outlook.

“Based on our assessment of national and regional trends, we believe that the Southern Nevada economy will continue to see improvement in 2015 and 2016,” a report summarizing Brown’s and Kennelly’s findings said. “The gains will be stronger in 2015 than in 2014 and stronger in 2016 than in 2015.”

The researchers said visitor volume and gross gaming revenue would continue to climb, but at a slower pace than in 2014.

“As visitor volume continues to grow, the hospitality industry will gradually shake off the effects of its excess capacity,” they said. “Southern Nevada hotel-motel capacity has increased very slightly in 2014. The scheduled opening of several properties in Las Vegas will add more capacity in 2015 and 2016.”

The most widely anticipated opening will be the Chinese-themed Resorts World Las Vegas, a $4 billion, 6,500-room resort on the Strip across the street from Wynn Las Vegas. The Malaysia-based Genting Group expects to open the property in 2016.

Jobless rate expected to dip

The economists also expect housing prices to continue to rise because of relatively few developed lots and new housing below replacement costs.

“The number of housing units permitted increased in 2014, but at a much slower rate than in 2013,” the economists said. “Permitting is likely to show continued gains in 2015 and 2016 at rates similar to those in 2014.”

Because of the expected growth in the leisure, hospitality and construction sectors, the jobless rate is expected to drop to 6 percent by 2016.

Strengthening employment trends also are expected to drive population growth.

“Over the next few years, we may see a transition to population growth returning as a driver of economic growth that it was throughout much of Las Vegas’ history,” they said.