Voices | Bill O’Driscoll: Consumer confidence driving sales growth in N. Nevada
November 28, 2016
Voices: Bill O’Driscoll | Post-recession economic engine humming ahead
Spend money. It’s what Americans do.
And in Nevada, it’s what feeds billions of dollars into the economy every year, generating taxable sales, the single biggest driver of revenue for government, on everything from dining out to buying cars to building homes and businesses. As an element of the economy based largely on emotion (think consumer confidence), spending is crucial. As taxable sales go, so goes the economy.
On that score card, at least, Washoe County is rolling.
Look at the data. For fiscal year 2016 that ended last June 30, total taxable sales in the greater Reno-Sparks region rose a robust 10.7 percent over the prior 12 months to $7.55 billion, according to Nevada Department of Taxation figures. That was more than twice the growth rate in Clark County, 4.7 percent, and the state as a whole, 4.8 percent.
Now look at the longer trend. It marked the sixth fiscal year in a row of annual taxable sales increases in Washoe County, proving just how far the region has come in its recovery from the Great Recession.
A year-by-year comparison of taxable sales over the past decade shows what a volatile roller coaster ride it’s been for Washoe:
Fiscal 2006 from ’05: +8.8%
Fiscal 2007 from ’06: -0.9%
Fiscal 2008 from ’07: -5.3%
Fiscal 2009 from ’08: -16.4%
Fiscal 2010 from ’09: -9.3%
Fiscal 2011 From ’10: +2.0%
Fiscal 2012 from ’11: +4.5%
Fiscal 2013 from ’12: +5.5%
Fiscal 2014 from ’13: +9.4%
Fiscal 2015 from ’14: +7.0%
Fiscal 2016 from ’15: +10.7%
Looking ahead, the current July-to-June fiscal year continues to move the ball forward. This past July and August, the latest months reporting, had combined sales that put Washoe 7.7 percent ahead of the same period in 2015 with the crucial autumn/early winter holiday sales stretch still to come.
The history of the sales and use tax in Nevada is rooted to the 1955 Legislature, when a modest 2 percent tax was enacted and then approved by voters a year later by a more than 2-1 margin.
Since then, the tax has been revisited numerous times with added components such as the local school support tax created in 1967, and two years later when state lawmakers gave Nevada’s 17 county commissions the authority to levy a third component, the city-county relief tax.
Over time, the original 2 percent rate has swelled three-fold or more, depending on the county. Before Election Day this year, Washoe’s rate stood at 7.725 percent. Now, with voter approval of WC-1 on Nov. 8, that will rise by 0.54 points to 8.265 percent starting next spring to help pay for capital repairs and construction for the Washoe County School District.
It remains to be seen how that might impact consumer confidence and the ongoing streak in annual taxable sales increases in Washoe County. Assuming the tax hike begins as intended next spring, it would play in only two or three months of the current fiscal year that will end on June 30, 2017.
But within the known data at least, no factor drives spending more than consumer confidence. On that end, confidence appears solid in Washoe through August. (State and local taxable sales reports are released with a two-month lag time; September’s report is expected to be released by the end of November.)
A breakdown of Washoe’s August revenues shows general strength in key consumer confidence-based spending categories as defined by the Department of Taxation:
Automobiles. Auto/auto parts sales perennially vie for the single biggest driver of taxable sales across Reno-Sparks. In August, sales topped $99 million, up 9 percent from August 2015.
Restaurants and bars. Another crucial indicator of consumer willingness to spend discretionary dollars, these sales match automobiles as the biggest revenue source in Washoe. In August, sales of $98.5 million were largely unchanged from August 2015.
General merchandise stores. Where we go for everyday needs is another reliably big category, generating $66 million in August sales, a 3.5 percent increase from a year earlier.
Merchant wholesalers, durable goods. Always a strong sign of the economy’s well-being and expectations, sales rocketed by 26.2 percent in August over 2015 for a total of $57 million.
Building materials. A key sign of broad business growth, both commercial and residential, August produced strong sales of $39.1 million for a 12.4 percent rise from a year earlier.
Furniture/home furnishings stores. Another window on consumer confidence, sales rose 15.8 percent to $16.2 million in August.