Real estate hurts Nevada but no crisis: governor

By Adam Tanner

LAS VEGAS (Reuters) - A sharp slowdown in the real estate market is hurting Nevada's economy and revenue, but strong development in Las Vegas and other factors should help avert a crisis, the state's governor said in a rare interview.

"I think we're going to see some slowing from the growth rate of revenues coming into the state of Nevada due to the downturn in the real estate market over the last couple of years," Gov. Jim Gibbons told Reuters late on Thursday after chairing a closed-door meeting with bankers on the growing number of foreclosures.

"But I don't see any major or dramatic decreases in the state's revenue capability," he continued. "We may have to do some belt tightening, that's normal in this type of environment, but Nevada is still very strong. The economy is still robust and the future of Nevada looks bright."

A state that long advertised itself as a place where anything is possible, Nevada lures thousands of newcomers every month hoping to make a new start. With Las Vegas tourism flourishing, many residents have enjoyed a boom in recent years.

Yet housing is now clouding the economic picture, and thousands of homes in Las Vegas sport "for sale" signs.

"We are seeing a real estate industry that is indeed reeling from a glut of more houses on the market than ever before, valuations dropping because supply and demand dictate that," said Gibbons, a Republican who served for a decade in the U.S. House of Representatives before taking office as governor this year.

"We're seeing the reaction of a lot of investors who were attempting to take advantage of Nevada's rapidly growing market," he continued. "On any given day in Las Vegas, we're processing 40 to 60 foreclosures. We have the highest per capita foreclosure rate in the nation."

According to the Southern Nevada Home Builders Association, new home sales plunged by nearly 50 percent over the first eight months of this year compared with the same period in 2006.

"We're seeing a slowdown in employment in the construction industry primarily due to the housing market, but that is kind of masked in the increase in construction in the 20 to 40 billions of dollars of development that we have here in the Las Vegas metropolitan area," said Gibbons.

"Those are, cutting across the spectrum of the economy, helping us dramatically weather some of these other downturns that you're seeing with the housing market."

NO NEW CASINO TAXES

Some Nevadans have proposed relieving homeowners by eliminating property taxes to be offset by increased levies on casinos, a move Gibbons opposes that would impact companies such as MGM Mirage and Harrah's.

"When I look out there and see $20 billion to $40 billion worth of investment, most of which is coming out of the gaming industry and expanding not only the tourism market but expanding the number of jobs in this state by 50,000 over the next two years, I am loathe to think we should cut off the hand that's feeding us," the governor said.

"This is killing the goose that laid the golden egg. I think they pay a tremendous amount of tax already."

Although a newcomer to the job, Gibbons has sparked headlines -- and often shunned the media -- due to some controversial remarks and a FBI probe reported earlier this year into whether he engaged in influence peddling as a member of Congress.

"If it was such a big deal, don't you think they would have made an issue to come talk to me?" he told Reuters. "They have not called me, they have never contacted, they have never written me a letter, they have never stepped on my door. They know where to find me."

A former airline pilot, Gibbons sees Nevada diversifying its economy in the future with major energy developments.

"I think Nevada is probably in an excellent position to become an energy exporter. We are uniquely positioned with geothermal and with solar, with wind capabilities," he said.

"Today we import about 2 billion dollars worth of electricity into this state. We have the natural and abundant renewable energy that's unique to Nevada that could not only capture that expenditure of 2 billion but also make it available to exporters."

Despite such talk of alternative energy, Nevada has not joined California and other Western U.S. states and Canadian provinces in pledging to cut greenhouse gas emissions

"We're not just going to leap off a cliff because of what some other states have done," Gibbons said. "We want to know and look with certainty what Nevada is doing, what our economy is expecting and where we are going to go in the future."