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The Nevada Resort Association is urging lawmakers to provide relief to the state’s struggling tourism industry, warning that the sector could see nearly $39 billion in lost economic activity due to closures from COVID-19.

In a letter sent to Nevada’s congressional delegation in Washington D.C., resort association CEO Virginia Valentine raised alarms about double-digit unemployment, huge financial losses for businesses, and significant reductions in tax revenue for funding state and local governments unless the industry gets help in dealing with COVID-19’s unprecedented impact.

“Nevada is the crossroads where all the segments of the travel industry meet — making us the national epicenter of economic devastation caused by COVID-19,” Valentine said.

“No other state in America depends on travel and tourism at the magnitude Nevada does.”

‘This condition is not sustainable’

The association made its case by presenting a sobering analysis from data firm Applied Analysis based on mandated closures lasting between 30 days to 90 days, followed by a required recovery period that can range anywhere from a year to 18 months.

The loss of meetings and conventions from March and April alone is already projected to lead to a $2 billion loss in economic activity, according to the organization. The resort association also rattled off a list of impacts ranging from job loss to reductions in the state’s general fund revenue.

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Nevada’s tourism industry generates a total of $20 billion in wages each year for its 450,000 workers and accounts for a third of all jobs in the state. Following the mandatory closures ordered by Gov. Steve Sisolak for non-essential businesses such as casinos, however — a move that the resort association says it agreed with — three out of every four tourism positions are now at immediate risk. The number is nearly double of what was reported during the Great Recession, according to the resort association.

So far, the impacts to employees are being somewhat blunted by companies that are still able to maintain payrolls and health benefits for workers despite the closures. Such moves, however, can only be maintained for a limited amount of time, the association warned.

“This condition is not sustainable,” Valentine said. “Nevada could quickly see its unemployment rate increase above 30 percent and its state output fall by a similar factor.”

It would also lead to $5 billion in direct wage losses, which goes up to $7.7 billion when factoring the indirect impacts, according to Applied Analysis.

State, local government funding to take a big hit

In addition to the financial squeeze that it is putting on tourism-related businesses and employees, the COVID-19 impacts will put a significant hit on state and local government finances.

The industry generates more than $1 billion in tax revenue from sources such as hotel room, gaming, entertainment, and payroll and business taxes. About half of the revenue goes to Nevada’s general fund, which relies on tourism tax revenue for about 40% of its total budget, Valentine said.

The loss in state and local revenue would adversely affect a host of public programs and services such as education, transportation, police and fire. The city of Reno, for example, is looking at a potential $20 million hit to its budget from COVID-19.

The impact of a significant loss in public revenue would also be magnified at a time when more Nevadans are seeking assistance due to job loss from the state’s business closures. The Department of Employment, Training and Rehabilitation has already seen new weekly unemployment claims in Nevada triple during the week ending on March 14.

The negative impact on public coffers was not lost on the Nevada Resort Association.

“The ensuing strain on state and local governments and other service providers, which are disproportionately reliant on tourism-related tax revenues and will quickly deplete unemployment insurance funds and reserves, would be catastrophic,” Valentine said.

The resort association is not the only entity in Nevada seeking federal help in light of the challenges stemming from the novel coronavirus. On March 18, Vegas Chamber President and CEO Mary Beth Sewald sent a letter to Congressional leaders and asked for federal assistance. Gov. Sisolak also reached out directly to President Donald Trump this month as well.

The resort association described the COVID-19 impacts as “an unprecedented economic situation that will have catastrophic financial ramifications” for Nevada’s residents and its businesses.

“With each passing day Nevada’s tourism-based economy is shuttered, the more difficult it is for Nevada to recover and for the state’s largest employers to continue assisting their workers during these uncertain times,” Valentine said.

Jason Hidalgo covers business and technology for the Reno Gazette Journal, and also reviews video games as part of his Technobubble features. Follow him on Twitter @jasonhidalgo. Like this content? Support local journalism with an RGJ digital subscription.