Economic Forum May 1st Meeting Rebound Projected in 2011
Construction Wage & Employment at 1996-2005 Levels
Many a tree sacrificed its life at the much anticipated State of Nevada Economic Forum May 1st meeting held in Carson City. Piled high on the sign-in table were stacks of analysis complied by several organizations including the Fiscal Analysis Division, Department of Taxation, Executive Budget Office, Gaming Control Board, and a forecasting company called Global Insight. If you are an economist or a person who likes piecing together a financial puzzle - this was your kind of place.
The projected forecast information accepted by Committee members at the meeting revealed Nevada's revenue estimates to have a budget shortfall of approximately $900 million. As reported $350 million in Federal stimulus money coming into the state is projected to leave a remaining gap of about $450 million in the State's budget. Add another $60 million in additional spending approved by lawmakers to fund "essential" services and the difference is estimated to be more like $550 million.
Read on to understand how the projections relate to Nevada's Construction Industry for 2009 Q3 & Q4 and 2010 through 2011.
One of the interesting tables was prepared by the State of Nevada Fiscal Division relating specifically to Modified Business Tax - Nonfinancial institutions.
A modified business tax (excise tax) is imposed on each employer at the rate of 0.63 percent of the wages as defined in NRS 612.190, paid by the employer during a calendar quarter with respect to employment.
This report included actual (1991-2009 Q2) and forecast (2009 Q3 & Q4 -2011) based on total wage disbursements and employment by industry.
Construction and Mining Industry |
Actual (FY 2009 Q2) & Forecast |
| Wage Disbursements | Employment |
| (Million$) | % Change | (Thous.) | % Change |
FY2004 | $5,261 | 12.7% | 117.0 | 12.2% |
FY2005 | $6,456 | 22.7% | 137.4 | 17.4% |
FY2006 | $7,520 | 16.5% | 153.2 | 11.5% |
FY2007 | $7,952 | 5.7% | 150.5 | -1.8% |
FY2008 | $8,169 | 2.7% | 138.2 | -8.1% |
FY2009 | $7,560 | -7.5% | 118.3 | -14.4% |
FY2010 | $6,684 | -1.6% | 101.2 | -14.5% |
FY2011 | $6,194 | -7.3% | 92.9 | -8.2% |
*note: percentage (%) change from previous year
So what does the above table mean?
One interpretation is that the projected wages for the Construction and Mining Industry for FY2009 are comparable to 2006 levels while total employment is comparable to FY2004. Subsequent forecast years FY2010 & FY2011 wages fall at 2005 levels with employment levels comparable with 2000(100.2) & FY 1996-1997(86.0-98.4).
In trying to validate to the Economic Forum Committee members, what appeared to be human adjustments, Russell Guindon, a legislative fiscal analyst and economist, explained that methods of forecasting in some cases is more of a "comfort level".
Gunidon added that the some of the data analyzed did not allow for using a traditional approach due to the current economic anomalies, and the normal mathematical forecast modeling methods results could not be explained; hence the need for best guess analysis.
Meeting Summary: Nevada's Construction Industry may experience 2005/2006 wages at 1996 employment levels. Agency staff reports at the Economic Forum meeting projected an economic rebound to be anticipated in FY 2011.
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