Infrastructure and Growth: Staying Ahead of the Curve
LAS VEGAS GLOBAL ECONOMIC ALLIANCE
At LVGEA, our ability to affect change through economic opportunity and transformation is powerful and more necessary than ever. One of the ways we can improve economic opportunity is by developing infrastructure that benefits all Southern Nevadans. So, in this infrastructure edition of the Perspective Update, you’ll find insightful commentary on infrastructure development from the Regional Transportation Commission along with polling, updated market information, and a timely economic update from Applied Analysis.
REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA
The Road Ahead Post COVID-19
Like many public agencies nationwide, the Regional Transportation Commission of Southern Nevada (RTC) is dealing with funding constraints following an unprecedented public health and economic crisis. Unlike any other agency in the country, we oversee roadway funding, public transit and traffic management all under one roof. As both our transit and roadway operations take a financial hit due to COVID-19, their impacts tell very different stories for our community’s transportation system.
The statewide shutdown of non-essential businesses inevitably caused a sharp decline in vehicle traffic. For the first time, traffic on I-15 at the Nevada/California stateline dropped by more than 60% in April compared to the same time last year. This drop in traffic volume also resulted in a dip in fuel tax revenue which, for the most part, funds roadway projects.
Because of our community’s investment in roadways, the RTC has healthy cash balances in roadway funding, and projects already underway will not be affected. There are currently more than 240 projects in different stages of construction in Southern Nevada that will continue to improve our infrastructure and provide much-needed jobs.
Despite expecting a dip in revenue over the next five years, a total of $250 million dollars will be available in 2021 that will put people to work in your neighborhood and ultimately improve your commute. In the long term, the RTC is working with local jurisdictions to fund more than $2.1 billion in roadway projects over the next 10 years to better connect our growing population and reduce congestion.
On the other hand, fuel tax revenue cannot be used to operate public transit, which is funded primarily by sales tax and passenger fares. In 2019, we provided more than 64 million passenger trips on 39 bus routes, transporting our residents and visitors to work, doctor appointments, grocery stores, entertainment, and more.
Unfortunately, we don’t anticipate hitting 64 million rides this year. Almost immediately after the governor’s stay-at-home order, the RTC began scaling back and suspending transit service due to a drastic drop in ridership resulting in severe revenue decreases. And revenue was further impacted when we quickly implemented extensive sanitizing, social distancing and safety measures.
Nationwide, transit agencies are currently maneuvering through uncharted territory and adjusting to the new normal. As an agency, we are grateful to our federal delegation to receive $112 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act grant funding. However, it is a temporary solution and not a source we can rely on for long-term operations. A lot remains unknown, but what is certain is our dedication to making fiscally responsible decisions and our commitment to be transparent with our customers and community during this difficult time.
As we look to the future in a post-pandemic world, it is unclear what the future holds and the transportation industry is no different. Like many of you, we are working to better understand what our new normal will be and how we will need to recover and potentially reshape mobility in Southern Nevada. But if anything is clear it is that we are a resilient community and will be a better and brighter Southern Nevada.
The Las Vegas Perspective survey examined opinions and attitudes of the Southern Nevada workforce testing sentiments around our region’s economy. This web-based survey was commissioned by Las Vegas Global Economic Alliance and conducted in early 2020.
Since this survey is intended to poll the Clark County workforce, results remove self-selected retirees and unemployed workers as well as self- selected residents of other counties. The sample size of the survey is 500 with a margin of error of +/- 3.7 percent at the 90 percent confidence interval.
Updated Regional Economic Statistics
PRINCIPAL, APPLIED ANALYSIS
It is a time for cautious optimism as the state moves into Phase 2 of the Nevada United: Roadmap to Recovery for reopening the economy. While health and safety is critically important, two-plus months of social distancing, nonessential business closures and other public health measures have taken a heavy toll on the Southern Nevada’s economy. The move toward easing business closures and adapting to a new way of everyday public life are necessary for the restoration of economic activity and people returning to work.
The impacts of the COVID-19 business closures, travel cutbacks and other effects of the public health crisis are acutely evident in Southern Nevada. Visitor volume, McCarran International Airport passengers and other key metrics reflect the virtual shutdown of the region’s all-important tourism industry, and the regional unemployment data capture the toll. The April 2020 unemployment rate in the Las Vegas MSA registered 33.5 percent, an unprecedented level more than twice the previous high of 14.1 percent in September 2010. Southern Nevada’s unemployment rate drove the statewide rate to 29.8 percent, the highest in the nation.
The record unemployment rate equated to a 20.8 percent drop in Southern Nevada’s total employment, which declined from 1.03 million in April 2019 to 817,900 in April 2020. The loss of 213,700 jobs during that time was equivalent to all of the net jobs gained in the region since late 2011, with the vast majority of losses coming in April alone. The leisure and hospitality industry bore the brunt of the losses, with 128,300 fewer jobs (-43.2 percent) compared to a year ago. Other sectors suffering heavy employment drops included retail trade, which declined by 28,200 jobs (-26.1 percent), and professional and business services, which fell by 33,100 jobs (-21.9 percent) over the year. The construction industry was a rare bright spot by adding 3,800 jobs (+5.5 percent) over the past 12 months.
Predictably, the widespread business closures spurred unemployment insurance claims to skyrocket over the past two months. Since mid-March, more than 378,000 Southern Nevadans have filed for unemployment benefits, and 333,000 were receiving them as of mid-May. These weekly payments, bolstered by federal funds under the CARES Act, have provided a financial lifeline for hundreds of thousands of Southern Nevada workers and their families. Should current public health trends hold and more businesses reopen in the coming weeks and months, this should help stop the bleeding.
With the Southern Nevada construction industry deemed an essential business, a number of major projects, including private and public infrastructure projects, continued to move forward. The $2.0 billion Allegiant Stadium project remains on schedule to open later this summer, and the $1.4 billion Las Vegas Convention Center expansion is on track to open by the end of the year. In addition to these notable tourism-related infrastructure projects, the I-15 Tropicana Project, which will increase traffic capacity at a critical interchange near the stadium, is in the pre-construction stages and on track to start next year. At the Las Vegas Convention Center, digging for the Boring Company’s two underground tunnels has been completed, and the company is transitioning to the build-out of the above-ground passenger stations that will move convention attendees across the convention center campus. That project remains on schedule to open in January 2021 in time for the scheduled Consumer Electronics Show.
Other infrastructure projects moving forward include the repaving of Las Vegas Boulevard, the widening of the southern 215 Beltway and additional improvements along the northern 215 Beltway near Interstate 15. Also on the watch list is high-speed rail service between Southern Nevada and Southern California, a key market that supplies a quarter of annual visitation. When these projects complete in the coming years, they will be important additions to the Southern Nevada infrastructure framework that will be poised to support the recovering economy and provide a platform for further growth for decades to come.
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