Sales dip extends gloom

CARSON CITY — Statewide taxable sales were down by 5.4 percent in February over the same month in 2007, continuing a string of grim economic news for the state and the budget, the Department of Taxation reported Friday.

Despite the gloomy numbers, the report won’t require any immediate reaction to reduce state spending further. The report is tracking with the state’s most recent and lower revenue projections.

Almost all major taxable sales categories were lower in February than they were a year ago, including bar and restaurant business, which was off a whopping 9.4 percent. One bright spot was in commercial construction.

The February drop is worse than the 4.9 percent decline reported in January and now ranks as the worst month so far in the current downturn.

“Clearly, the drop in consumer spending is having an adverse effect on revenues, as is the nationwide housing problem, which is particularly acute in Nevada,” Gov. Jim Gibbons said in remarks accompanying the report. “Despite the overall decline, commercial construction activity in Southern Nevada produced a strong showing for the month.”

Taxable sales statewide totaled $3.6 billion in February, down from the $3.8 billion reported in February 2007. For the fiscal year to date, which began July 1, taxable sales are down 2.3 percent.

Taxable sales in Clark County totaled $2.8 billion in February, a 3.1 percent decline over the same month a year ago.

State Budget Director Andrew Clinger said the February report, while down, “is still right on target with our projections.”

The next analysis of the state’s fiscal condition will come in late May, when the March taxable sales report is released, he said. That report will include quarterly updates on three key revenues: the insurance premium tax, the modified business tax and the real estate transfer tax.

Depending on how those revenues perform, further budget cuts could be required, Clinger said.

Cuts totaling more than $900 million already have been implemented by Gibbons and lawmakers. The most recent projections through June 30, 2009, which are still on track, show an estimated $595 million less in tax revenue than originally forecast for the two-year budget.

As to the big question of when the economy will bottom out and begin its recovery, there are several different scenarios depending on who you talk to, he said.

“The reports I’ve seen range from November of this year to the spring of next year to mid-2009,” Clinger said. “So it’s hard to say at this moment.”

Still, the category of construction of buildings was up 448 percent over February 2007. A number of major construction projects are under way in Southern Nevada.

Other positives were seen in specialty trade contractors, up 42 percent; administrative and support services, up 58 percent; telecommunications, up 44 percent; and miscellaneous manufacturing, up 32 percent.

But other taxable sales categories continued their slump. Merchant wholesalers/durable goods were off 7.4 percent, motor vehicle and parts dealers were down 4.4 percent, general merchandise stores were off 17 percent and clothing and accessories stores were down 1.6 percent.

Food and beverage stores were down 12.4 percent, home furniture and furnishings slid 9.9 percent and accommodations were off by 1.6 percent.

A decrease in taxable sales for February 2008 compared to February 2007 was recorded in 11 of Nevada’s 17 counties: Carson City, Churchill, Clark, Elko, Eureka, Humboldt, Lander, Nye, Storey, Washoe and White Pine.

Sales taxes collected from business activity in Nevada, a major component of the state general fund budget, are now $75 million below what was forecast for this first eight months of the fiscal year.

Contact Capital Bureau reporter Sean Whaley at or 775-687-3900.

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