Brian Bonnenfant, Center for Regional Studies at UNR, and I did a presentation this morning for the Northern Nevada Network. The presentation focused on an overview of the economic performance of the Reno MSA, including a look at historical economic indicators, including taxable sales, gaming revenue, visitors, single family home sales, home prices, employment, wages, and more. The presentation also considered future population and employment projections and issues in the region associated with this growth. A copy of the presentation is included below:
Brian Bonnenfant from the Center of Regional Studies at the University of Nevada, Reno and I were recently asked to estimate fiscal and economic impacts of the Tesla gigafactory proposed to be built in Storey County, NV on the neighboring Reno-Sparks region. The exact impact of the project is difficult to estimate at this point due to the early stage of the development process, the size of the project, and lack of comparable industries in the area. Our presentation, instead, focused on existing data and areas of potential concern as the project becomes operational.
The biggest conclusion of our analysis is the large number of employees projected for the Tesla gigafactory-6,000 to 6,500 direct operating employees are projected, with approximately another 16,000 indirect employees. The majority of these employees will reside in the Reno-Sparks area and Lyon county.
New residents will require local government services immediately upon moving to the area, while revenues generated by these residents for local governments may not be immediate. With the benefits of increased employment, higher wages, higher home values, and additional services, we will also expect growing pains in the form of increased traffic, temporary housing price “bubble”, local government budget concerns, and employee shortages. These are all expected to recede once the region absorbs the new residents and reach a new, larger population base.
For a full copy of the presentation, please click here: The Impact of Tesla on Reno-Sparks
The recent recession has had a significant impact on the retail industry. Taxable retail sales, main measure of industry performance, fell by $7.4 billion between their peak in FY 2005-06 of $26.1 billion and $8.7 billion in FY 2009-10, a drop of 28. Employment decreased from 139,000 in FY 2007-08 to 127,000 in FY 2009-10. These decreases not only hurt those associated with the industry, they impact the public and private sectors of the entire State. Sales tax revenue, which funds operations for the State, local governments, school districts and special projects, declined from a total of $2 billion in FY 2005-06 to $1.5 billion in FY 2009-10, the impact lessened by the increase in sales tax rates in most counties.
Other revenues generated by the retail industry, have also been reduced, including local payments for property and business-type taxes and fees, as well as State and Federal taxes. This decrease in revenues, without a comparable decrease in government services (police, fire, EMS, schools, etc.) makes it difficult for State and local governments to balance their budgets and continue providing the same level of service as prior to the recession.
In addition to the impact of the recession on the public sector, the private sector was also impacted outside of the retail industry. A decrease in employment compensation, proprietors income, and other property type income by the retail industry impacted the entire State, reducing total industry impacts by over $2 billion. Industry employment and jobs supported by industry operations decreased by 46,000 jobs between FY 2005-06 and FY 2009-10. The retail industry lost almost 36,000 jobs between FY 2005-06 and FY 2009-10, with 38% of these jobs lost in the sales and related occupations, 19% in installation, repair and maintenance occupations and 15% in office and administrative support occupations.
Overall, the retail industry remains an important industry in the State of Nevada, it is still the fourth largest industry in terms of employment and one of the few industries that grew due to regional factors during this recession period. Local and State governments depend heavily on sales tax revenue and employees on retail jobs. Despite the decline during the recession period, it is likely that the industry will recover to continue its important role in the State of Nevada economy.
For details and additional information, please see the below study: