mining through uncertainty · 30/06/2019 · mining & logging other services government...

MINING THROUGH UNCERTAINTY

The Importance of Minerals in Our Lives

MINING THROUGH UNCERTAINTY 2

Source: Minerals Education Coalition, National Mining Association, the U.S. Geological Survey and the U.S. Energy Information Administration

The Importance of Minerals in Our Lives


Source: Minerals Education Coalition, National Mining Association, the U.S. Geological Survey and the U.S. Energy Information Administration

How Stable is Mining Production in Nevada?


Nevada Mining Operations


Source: Nevada Department of Taxation

103Active Operations

in 2018


$7.7BGross Proceeds of

Minerals in 2018





-4.1%Annual Gross Proceeds

Loss from 2017 to 2018


Nevada GDP Growth by Sector2008-2018 Compound Annual Growth Rate


Source: United States Bureau of Economic Analysis

-2.4%

-2.3%

-2.1%

1.4%

1.5%

1.9%

2.0%

2.2%

2.7%

2.9%

3.1%

3.1%

3.4%

4.2%

4.4%

4.4%

4.5%

4.8%

5.3%

5.6%

7.3%

Mining

Construction

Agriculture

Utilities

Accommodation/Food

Prof/Scientific/Tech Services

Real Estate/Rental/Leasing

Durable Goods

Government

Wholesale Trade

Other

Retail Trade

Arts/Entertainment/Recreation

Finance/Insurance

Admin/Waste Management

Nondurable Goods

Management of Companies

Health Care/Social Assistance

Education

Transportation/Warehousing

Information

All Industries Total:

+2.5%

Mineral ProductionPast 12 Months

Increased10.0%

Remained About the Same40.0%

Decreased40.0%

Refused/NA10.0%

Increased Remained About the Same Decreased Refused/NA


Source: NvMA 2019 Survey

Nevada GDP Growth by Sector2017-2018 Compound Annual Growth Rate



-18.1%

-7.3%

0.8%

1.3%

2.6%

4.9%

5.8%

5.9%

6.4%

6.8%

7.3%

7.3%

7.5%

7.7%

8.3%

9.1%

9.6%

9.7%

12.8%

14.1%

23.9%

Mining

Agriculture

Accommodation/Food

Government

Utilities

Retail Trade

Other

Real Estate/Rental/Leasing

Finance/Insurance

Prof/Scientific/Tech Services

Health Care/Social Assistance

Wholesale Trade

Information

Transportation/Warehousing

Arts/Entertainment/Recreation

Admin/Waste Management

Education

Management of Companies

Construction

Nondurable Goods

Durable Goods

All Industries Total:

+5.6%

Mining Gross Domestic Product (In Billions)Nevada

$3.5

$4.1 $3.9

$5.1

$6.3

$5.7

$4.4

$3.4

$2.7

$3.3

$3.9

$3.2

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18



Mining GDP Share of All Industry TotalNevada

2.6%

3.1% 3.3%

4.2%

5.0%

4.5%

3.4%

2.5%

1.9%2.2%

2.5%

1.9%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18



Mineral ProductionNext 12 Months

Increase40.0%

Remain About the Same30.0%

Decrease20.0%

Refused/NA10.0%

Increase Remain About the Same Decrease Refused/NA



Business Revenues or SalesPast 12 Months

Increased42.9%


Decreased16.3%

Refused/NA12.2%




Business Revenues or SalesNext 12 Months

Increase53.2%

Remain About the Same21.3%

Decrease17.0%

Refused/NA8.5%

Increase Remain About the Same Decrease Refused/NA



Business ProfitabilityPast 12 Months

Increased36.7%


Decreased20.4%

Refused/NA14.3%




Are Commodity PricesGoing to Increase?


Commodity PriceNext 12 Months

48.9%

56.5%

63.8%

40.4%

39.1%

31.9%

10.6%

4.3%

4.3%

Copper

Silver

Gold

Increase Stay About the Same Decrease



Price Change Over the Past Year



OVER THE PAST YEAR (ACTUAL) PROJECTED IN NEXT 12 MONTHS

COMMODITY AUGUST 2018 AUGUST 2019 INCREASE DECREASE

Gold (per Troy Oz.) $1,180 $1,515 63.8% 4.3%

Silver (per Troy Oz.) $14.61 $16.93 56.5% 4.3%

Copper (per Pound) $2.72 $2.59 48.9% 10.6%

Price of GoldUSD per Troy Ounce

$1,515

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000


Source: London Bullion Market Association

Peak to Present:

-$380 (-20.0%)

Price of GoldUSD per Troy Ounce

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000


Source: London Bullion Market Association; NvMA 2019 Survey

64%

32%

4%

Price of SilverUSD per Troy Ounce

$16.93

$0

$10

$20

$30

$40

$50

$60


Source: London Bullion Market Association

Peak to Present:

-$31.78 (-65.2%)

Price of SilverUSD per Troy Ounce

$0

$10

$20

$30

$40

$50

$60


Source: London Bullion Market Association; NvMA 2019 Survey

57%

4%

39%

Price of CopperUSD per Pound

$2.59

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50


Source: London Metal Exchange

Peak to Present:

-$1.34 (-34.0%)

Price of CopperNext 12 Months

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50


Source: London Metal Exchange; NvMA 2019 Survey

49%

40%

11%

What is the Outlook for theMining Industry in Nevada?


Nevada’s Economy

Right Direction

75.5%

Wrong Direction

12.2%

Refused/No Answer12.2%

2019 Annual Survey

92.9%

75.5%

2018 2019

“Right Direction” Prior Year Comparison



Business Environment in NevadaPast 12 Months

8.2%

36.7%

40.8%

10.2%

4.1%

Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer



State Business Tax Climate


Source: Tax Foundation

Best Tax Climate

Worst Tax Climate

Nevada has the

9th

Best Business Tax Climate in the U.S.

Business Environment in NevadaNext 12 Months

4.1%

36.7%

46.9%

8.2%

4.1%

Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer



Elements of Nevada Mining that Most Encourage Investment

40.4%

41.2%

42.3%

53.7%

54.9%

Quality of Infrastructure

Availability of Labor/Skills

Political Stability

Certainty Concerning the Administration, Interpretation andEnforcement of Existing Regulations

Security


Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis

What is the Outlook for Mining Employment in Nevada?


Nevada EmployeesNext 12 Months

Increase57.1%

Stay About the Same30.6%

Decrease6.1%

Refused/NA6.1%

Increase Stay About the Same Decrease Refused/NA



Nevada Employment

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD

Annual Employment

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD

Year-over-Year Growth


Source: United States Bureau of Labor Statistics

Employment Growth by StateUnited States

3.3%

1.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

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Employment Growth by SectorNevada | Prior Year vs. Present

-125

25

792

1,458

2,683

5,092

5,300

5,450

6,583

9,733

12,225

Information

Mining & Logging

Other Services

Government

Financial Activities

Education & Health Services

Trade, Transportation & Utilities

Leisure & Hospitality

Manufacturing

Construction

Professional & Business Services


Net Growth:

+49,217


Employment Growth by SectorNevada | Prior Year vs. Present

-0.8%

0.2%

0.9%

1.6%

1.9%

2.1%

3.7%

4.0%

6.6%

11.3%

12.6%

Information

Mining & Logging

Government


Other Services





Construction

Manufacturing


Net Growth Rate:

+3.6%


Mining EmployeesNext 12 Months

Increase30.6%


Decrease26.5%

Refused/NA4.1%




Nevada Mining Employment

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD

Annual Employment

-15%

-10%

-5%

0%

5%

10%

15%

20%

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD

Year-over-Year Growth



Mining Company Employment GrowthNext 12 Months

Increase46.9%


Decrease4.1%

Refused/NA10.2%




How Much Does the Mining Industry Pay in Taxes to Nevada?


Ten Highest Assessed Taxpayers2018-2019


RANK TAXPAYER NAME TOTAL (IN MILLIONS)

1 MGM Resorts International $4,499

2 NV Energy (1,4) $2,425

3 Caesars Entertainment Corporation $2,223

4 Wynn Resorts Limited $1,113

5 Las Vegas Sands Corporation $1,037

6 Station Casinos Incorporated $857

7 NEWMONT MINING $662

8 Station Casinos Incorporated $522

9 BARRICK MINING $504

10 Ruby Pipeline LLC $439

TOTAL $14,281


Other96.9%

Mining-Related3.1%

Roll Assessed Value by Class2017-2018



Net Proceeds of Minerals Taxes Paid By Nevada Mining Industry, Including Royalty Recipients (In Millions)

$62.6$75.7

$91.8 $97.6

$163.0

$216.7

$255.6

$171.0

$103.2 $101.6

$136.6

$155.1

$125.9

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18



Share of Net Proceeds Tax Generated by Specific Minerals2018

Gold/Silver91.9%

Copper2.7%

Geothermal1.3%

Gypsum0.05%

Oil0.3%

Other3.8%


Source: Nevada Department of Taxation (Operators and Royalties Combined)

$126 MTotal Net Proceeds

Tax Generated

Share of Net Proceeds Tax Generated by Specific Minerals2018

Gold/Silver91.9%

Other8.1%


Source: Nevada Department of Taxation (Operators and Royalties Combined)

$116 MNet Proceeds Tax Generated

by Gold/Silver

Net Proceeds Tax Generated by County2018 | In Millions

$892.9

$367.9 $343.5

$232.7 $218.6$157.2

$44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0



Net Proceeds Tax Generated by County2018 | In Millions

$892.9

$367.9 $343.5

$232.7 $218.6$157.2

$44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0



78.3%Of Total Net Proceeds Tax

Generated by Top 4 Counties

Total Estimated Major Taxes Paid by Nevada Mining

$91.8 $97.6$163.0

$216.7$255.6

$171.0$103.2 $101.6

$136.6 $155.1 $125.9

$223.6$203.7

$314.0

$388.1

$431.4

$349.5

$245.8 $235.5

$292.3$312.2

$278.9

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Net Proceeds Sales/Use Tax Property Tax Modified Business Tax


Source: Nevada Department of Taxation, NvMA Member Survey, Natural Resource Industry Institute (2008 – 2010), Industry Surveys

Note: Historical figures may be adjusted to reflect the latest available information.

What Do Education Funding Formula Changes Mean for Mining?


Education Funding Under the

Nevada Plan

How Much is Nevada Spending on K12

Education?

▪ Is it the $1.6 billion reported as total Distributive School Account resources in

the executive budget?

▪ Is it the $2.2 billion reported in the Nevada Comprehensive Annual Financial

Report, State Spending Analysis?

▪ Is it the $2.3 billion reported as the legislatively approved total Department of

Education budget in the Fiscal Appropriations Report?

▪ Is it the $2.9 billion reported as total regular support in the Distributive School

Account?

▪ Is it the $3.2 billion reported as total required state support in Distributed School

Account?

▪ Is it the $3.9 billion reported as total operating expenditures in the state’s

Nevada Plan summary?

There are more than 80 state, local and federal revenue resources that have been dedicated to

education programs; they are expected to generate approximately $5.0B in FY2020 and $5.1B in FY2021

$5.0BHow Much is Nevada

Spending on K12 Education?

$6,052

$10,197

Basic Per Pupil Support(Gov Rec FY2020)

Total Education Resources Per Pupil(FY2020)

The differences are significant, limiting transparency and creating confusionHow Much is Nevada

Spending on K12 Education?

Douglas5,840

Clark324,000

Elko9,840

Humboldt3,480

Washoe64,500

Pershing690

Churchill3,250

Lander1,000

Eureka270

White Pine2,230

Lincoln980

Nye5,240

Esmeralda70

Mineral550

Lyon8,680

Storey440

Carson City

7,760

Student EnrollmentNevada School Districts

Nevada is home to one of the nation’s largest school districts (i.e., the Clark County School

District) and some of its smallest school districts

TransparencyHow much is being spent on education, where the funding is coming from and where is it spent

SB 543Guiding Principles

Student-CenteredRecognize the differences in cost per student, allocate funding accordingly

Geographic DiversityRecognize the differences in each school district, allocate funding accordingly

Hold HarmlessFocus on allocation of incremental revenue, minimizing reallocation at student expense

Classroom-focusedSupport classroom instruction and programming that directly improves student achievement

2Creation of the Nevada

Education Fund

1 3 4

The Core Elements of SB543

5Creation of

the Education Stabilization

Account

Replace the Nevada Plan with

the Pupil-Centered Funding Plan

Creation of the Commission

on School Funding

Enhanced Reporting and Accountability

at All Levels

STEP 1Identify all non-federal resources available to fund

education programs (see, Element 1)

State Admin. and Oversight Programs

STEP 2Allocate resources necessary to fund state

administration, oversight and non-district programs (i.e., funds not allocated to districts)

Base Funding(Inflation +

Enrollment Growth)

STEP 3Ensure that base funding is made whole such that

allocations made to all students are not diminished to increase allocations to selected students

Weighted Funding(Allocation of All Other

Funds)

STEP 4Additional funds are directed to weighted categories

in proportion to the gap between their current funding and targets under full adequacy

Excess Allocation(Distribution of

Funds After Parity)

STEP 5At the point where there is parity in funding relative to full adequacy, funds are proportionally allocated

Pupil-Centered Funding Model

State of NevadaEducation Fund

NDE/APA K12 Base Funding Allocation Recommendation“Successful Schools” Base Equity Allocation Adjustments

Small School District Adjustment

Necessarily Small Schools Adjustment

Comparable Wage Index

Weighted Funding Classifications

1 Special Education Students

2 English Language Learners

3 At-Risk Students (those living at or near the poverty level)

4 Gifted and Talented Students

Base FundingFunds Allocated to Every Student in the State

+Existing Categorical FundingAll Funds Currently Allocated to Programs Targeting Weighted Students Remain with

Weighted Students

+Incremental Funding

All Funds After Base Funding is Increased by Inflation are Allocated to Weighted Student

Programs Until Those Programs are Fully Funded

District-Level Impacts and Hold Harmless/True-Up Approach

Hold Harmless.All school districts will be frozen at

FY2020 funding levels, ensuring that

any school district that would receive

less funding under the student-

centered funding model does not

receive any less money that it did in

the current school year.

True-Up. Incremental K12 education funds will be

allocated to school districts that are

currently receiving less funding than

they would under the student-centered

funding model before any other

allocations are made, allowing them to

be made whole as additional K12

education funding is made available.

Impacts for Mining


▪ Nevada’s Constitutional Conflict

▪ Mining Tax Dollars are the First Education Dollars Distributed Under the New Formula, Must be Returned to the County of Origin

▪ If Mining Tax Dollars are Greater than the Total Amount of Funds that Would Otherwise be Allocated Under the Formula, Those Funds are “Authorized for Expenditure as a Continuing Appropriation for the Purpose of Mitigating the Adverse Effects of the Cyclical Nature of the Industry of Extracting and Processing Minerals on the Ability of the County School District to Offer its Pupils a Reasonably Equal Educational Opportunity.”

Where Do We Go From Here?▪ Implementation and Execution

▪ July 1, 2019 Effective Date

▪ July 1, 2021 Effective Date

▪ Communication and Messaging

▪ Public Sector

▪ Private Sector

▪ Commission on Education Funding

▪ Funding Adequacy

What are the Impacts of Mining in Nevada?


Employment Impacts for Nevada Mining Industry Operations2018

11,200

8,081

10,112

Direct Indirect Induced


Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis

29,393Total Jobs Supported by Nevada Mining

Industry Operations

Employment Impacts for Nevada Mining Industry Operations2018

32,234

34,495

32,904

30,162

29,35029,754

30,462

29,393

2011 2012 2013 2014 2015 2016 2017 2018



29,393Total Jobs Supported by Nevada Mining

Industry Operations

Wage/Salary Impacts for Nevada Mining Industry Operations2018

$1.3 B

$0.7 B

$0.5 B


$2.4 BTotal Labor Income Supported by Nevada

Mining Industry Operations



Wage/Salary Impacts for Nevada Mining Industry Operations2018

$2.58 B

$2.76 B

$2.64 B

$2.43 B

$2.36 B$2.40 B

$2.49 B

$2.41 B

2011 2012 2013 2014 2015 2016 2017 2018

$2.4 BTotal Labor Income Supported by Nevada




Value-Added Impacts for Nevada Mining Industry Operations2018

$4.2 B

$1.2 B

$0.9 B


$6.3 BTotal GDP Supported by Nevada Mining

Industry Operations



Value-Added Impacts for Nevada Mining Industry Operations2018

$6.8 B$7.3 B

$6.9 B

$6.0 B $5.9 B $6.1 B

$6.6 B$6.3 B

2011 2012 2013 2014 2015 2016 2017 2018

$6.3 BTotal GDP Supported by Nevada Mining

Industry Operations



Economic Output for Nevada Mining Industry Operations2018

$7.9 B

$2.0 B$1.5 B


$11.4 BTotal Economic Output Generated by Nevada




Economic Output for Nevada Mining Industry Operations2018

$13.0 B$14.0 B

$13.0 B

$11.1 B $10.9 B$11.3 B

$12.1 B$11.4 B

2011 2012 2013 2014 2015 2016 2017 2018

$11.4 BTotal Economic Output Generated by Nevada




What is the Outlook for theMining Industry Nationally?


National Economy

Right Direction

79.6%

Wrong Direction

10.2%

Refused/No Answer10.2%

2019 Annual Survey

75.0%

79.6%

2018 2019

“Right Direction” Prior Year Comparison



Investment Attractiveness IndexUnited States

52.956.6

69.3 70.4 70.7 72.5 74.0 74.579.9

83.9 84.3 86.193.0



Median: 74.0

Investment Attractiveness Index GrowthUnited States

-6.6%

-2.9%-0.4%

2.2%3.5%

6.1% 6.6%7.8% 8.8%

10.0%11.4%

13.9%

27.6%


Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis

Policy Perception IndexUnited States

69.677.8

81.285.2 85.5

90.2 90.3 91.7 93.8 93.9 94.7 96.3 99.3



Median: 90.3

Policy Perception Index GrowthUnited States

1.1%

7.2% 7.5%

9.7%11.0% 11.2% 11.6% 12.1%

13.6% 13.7%

16.8%17.6%

23.0%



Best Practices Mineral Potential IndexUnited States

36.4

47.9

57.1 57.7 58.7 60.7 61.566.7

70.076.3 78.8

86.5 88.8



Median: 61.5

Best Practices Mineral Potential Index GrowthUnited States

-15.0% -13.5% -12.9%-10.2%

-0.8%

0.6% 1.3% 3.8% 5.3%8.2% 9.3%

15.6%

58.2%



What is the Outlook for the Mining Industry Internationally?


Investment Attractiveness Index


2018

RankLocation

2017

Rank

2018

Score

Index

Score

1 NEVADA (US) 3 93.3

2 Western Australia 5 91.5

3 Saskatchewan (CA) 2 90.0

4 Quebec (CA) 6 88.4

5 Alaska (US) 10 86.1Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis

Policy Perception Index



2018

RankLocation

2017

Rank

2018

Score

Index

Score

1 Saskatchewan (CA) 3 100.0


3 Finland 2 99.2

4 Rep. of Ireland 1 97.7


Best Practices Mineral Potential Index



2018

RankLocation

2017

Rank

2018

Score

Index

Score



3 Alaska (US) 5 86.5

4 NW Territories (CA) 19 86.0

5 Nunavut (CA) 10 84.6

Regional Median Investment Attractiveness

54.156.6

59.8

66.3 68.3

74.0 75.5

81.2

Argentina Africa Latin Americaand Caribbean

Oceania Europe United States Australia Canada



Regional Median Investment Attractiveness Growth

-7.6%

0.5%1.5%

3.8%5.5%

7.1%

9.3%

16.5%

Argentina Africa Europe Oceania United States Australia Canada Latin Americaand Caribbean



Regional Median Policy Perception Index

56.560.8 61.1

64.3

84.1 85.489.9 90.3

Argentina Oceania Africa Latin Americaand Caribbean

Australia Europe Canada United States



Regional Median Policy Perception Index Growth

-7.9%

2.4%

7.5% 8.5% 9.3%11.2%

15.5%

28.6%

Argentina Europe Africa Canada United States Australia Latin Americaand Caribbean

Oceania



Trade Wars: What Do They Mean for Us?


China’s Dominance of the Rare Earth Market▪ Seventy percent of rare earths are mined in the

People’s Republic of China, and processes a greater percentage of the rare earths annually

▪ Eighty percent of U.S. imports of usable rare earths also come from China

▪ Earlier this year, the Chinese government suggested it would lower the amount of rare earths supplied to the U.S. as retaliation for increased tariffs on Chinese goods


Source: South China Morning Post

People's Republic of

China70%

Others30%

Rare Earth Extraction in 2018

Revitalizing the Rare Earth Market in the U.S.▪ The Mountain Pass mine, located an hour away

from Las Vegas, is a potential part of the answer to a reduced supply of rare earth minerals

▪ From the 1960s to the 1980s, the United States was a leader in extracting these minerals, and Mountain Pass was a big part of that

▪ Despite not being mined since 2015, Mountain Pass is still the largest source of rare earths in the country

▪ MP Materials, based in Las Vegas, is seeking to reestablish rare earth mining and help reduce dependency on imported rare earths


Source: South China Morning Post; Financial World; News 3 Las Vegas

People's Republic of

China70%

Others30%

Rare Earth Extraction in 2018

What About Electric Vehicles and Batteries?


Electric Vehicle Sales Rise Dramatically▪ 64% increase in EV sales 2017 to 2018

▪ 79% in the U.S.

▪ 78% in China

▪ 34% in Europe

▪ More than 1.27 million EVs are on the road in the U.S. as of June 30, 2019

▪ In Q2 2019, approximately 85,000 EVs were sold in the U.S.

▪ Q2 2019 sales increased 23% over Q2 2018 sales


Source: Edison Electric Institute and EV-Volumes.com

56,000

52,000

200,000

306,000

663,000

53,000

97,000

358,000

409,000

1,182,000

Japan

Others

United States

Europe

China

Global EV Sales

2018 2017

Electrifying Global Transportation


Copper and Electric Vehicles

49

85

132

183

196

814

Conventional Cars

Hybrid EVs

Plug-in Hybrid EVs

Battery Electric Vehicles (EVs)

Hybrid Electric Bus

Battery Electric Bus

Pounds of Copper Required ▪ Demand for copper in vehicles expected to increase by 1,700 kilotons by 2027

▪ 56% of all light commercial vehicles and 31%of all medium commercial vehicles will be electric by 2040


Source: Edison Electric Institute and the Institute for Electric Innovation

Exponential Energy Storage Growth Lithium, Cobalt, Nickel and other minerals needed


Purchasing Managers Index

0

10

20

30

40

50

60

70

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19


Source: Institute for Supply Management

How Might the State Budget Be Impacted by a Recession?


Nevada General Fund Revenue TrendsIn Billions

$1.7 $1.8 $1.8

$2.4$2.7

$3.1 $3.1 $3.1$2.7

$3.0$3.2 $3.1 $3.1 $3.1

$3.3

$3.7$4.0

$4.2

FY'01

FY'02

FY'03

FY'04

FY'05

FY'06

FY'07

FY'08

FY'09

FY'10

FY'11

FY'12

FY'13

FY'14

FY'15

FY'16

FY'17

FY'18

Sales Tax Gaming Taxes Mod. Business Tax Other


Source: Nevada Economic Forum

Public School EnrollmentNevada

467,527

498,616

'16 '17 '18 '19

31,089Increase in enrollment in Nevada

public schools between the 2015-2016 and the 2018-2019 school years


Source: Nevada Department of Education

Medicaid Eligible Recipients

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

'05 '07 '09 '11 '13 '15 '17 '19LTM

Eligible Recipients


-10%

0%

10%

20%

30%

40%

50%

60%

70%

'05 '07 '09 '11 '13 '15 '17 '19LTM

Annual Growth

Source: Nevada Department of Welfare and Supportive Services

Nevada Modified Business TaxIn Millions

$0

$100

$200

$300

$400

$500

$600

$700

FY'09

FY'10

FY'11

FY'12

FY'13

FY'14

FY'15

FY'16

FY'17

FY'18

▪ Modified Business Tax rate was scheduled to decrease this year

▪ Rate decrease eliminated in 2019 Nevada Legislature

▪ Estimated that this extension will generate $98 million of additional revenue over the biennia

▪ Pending lawsuit alleges that taxes were raised without the two-thirds majority as required by the Nevada Constitution


Source: Nevada Governor’s Finance Office; Las Vegas Review-Journal

Nevada Modified Business TaxIn Millions

$0

$100

$200

$300

$400

$500

$600

$700

FY'09

FY'10

FY'11

FY'12

FY'13

FY'14

FY'15

FY'16

FY'17

FY'18

Share of General Fund Revenue


Source: Nevada Governor’s Finance Office

14.5%Mod.

Business Tax

Nevada General Fund RevenueActual vs Forecasted - In Millions

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

FY'01

FY'02

FY'03

FY'04

FY'05

FY'06

FY'07

FY'08

FY'09

FY'10

FY'11

FY'12

FY'13

FY'14

FY'15

FY'16

FY'17

FY'18

Actual Forecasted


Source: Nevada Governor’s Finance Office; Nevada Economic Forum

How is Nevada’s Economy Different Today than During the Last Recession?


Foreclosure InventoryNevada

56,028

0

10,000

20,000

30,000

40,000

50,000

60,000

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19


Source: Mortgage Bankers’ Association

Foreclosure InventoryNevada

56,028

3,781

0

10,000

20,000

30,000

40,000

50,000

60,000

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19


Source: Mortgage Bankers’ Association

Negative EquityNevada

Q1 2010 Q1 2019


Source: CoreLogic

72.7%Negative

Equity

4.2%Negative

Equity

Building PermitsNevada

0

5,000

10,000

15,000

20,000

25,000

30,000

'07 '09 '11 '13 '15 '17 '19LTM

Building Permits

Single-Unit Multi-Unit


Source: United States Census Bureau

-60%

-40%

-20%

0%

20%

40%

60%

'07 '09 '11 '13 '15 '17 '19LTM

Total Permits Annual Growth

Building PermitsNevada

0

5,000

10,000

15,000

20,000

25,000

30,000

'07 '09 '11 '13 '15 '17 '19LTM

Building Permits

Single-Unit Multi-Unit



-60%

-40%

-20%

0%

20%

40%

60%

'07 '09 '11 '13 '15 '17 '19LTM

Total Permits Annual Growth

Median Housing PricesWashoe County

$467,191

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

'07 '09 '11 '13 '15 '17 '19

New Homes

$374,500

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

'07 '09 '11 '13 '15 '17 '19

Existing Homes


Source: SalesTraq

Home ClosingsWashoe County

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

'05 '07 '09 '11 '13 '15 '17 '19LTM

New Homes


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

'05 '07 '09 '11 '13 '15 '17 '19LTM

Existing Homes

Source: SalesTraq; NNRMLS

Median Housing PricesLas Vegas Area

$395,664

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

'07 '09 '11 '13 '15 '17 '19

New Homes

$272,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

'06 '08 '10 '12 '14 '16 '18

Existing Homes


Source: SalesTraq

Home ClosingsLas Vegas Area

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

'05 '07 '09 '11 '13 '15 '17 '19LTM

New Homes


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

'05 '07 '09 '11 '13 '15 '17 '19LTM

Existing Homes

Source: SalesTraq

Peak-to-Trough Employment MovementNevada

-84,200

-27,900

-23,800

-16,200

-12,300

-11,800

-2,300

-2,000

600

7,800

12,800

Construction





Manufacturing

Information

Other Services

Mining & Logging

Government




Net Job Loss:

-159,300 (-12.6%)

Trough-to-Present Employment MovementNevada

-2,400

2,800

3,100

10,100

18,800

22,900

40,900

42,800

51,900

60,100

66,600

Government

Mining & Logging

Information

Other Services


Manufacturing

Construction







Net Job Gain:

+317,600 (28.6%)

Las Vegas Strip Trends


$0

$1

$2

$3

$4

$5

$6

$7

$8

'07 '09 '11 '13 '15 '17 '19LTM

Bill

ions

Gross Gaming Revenue

Source: Nevada Gaming Control Board; Las Vegas Convention and Visitors Authority

$105

$110

$115

$120

$125

$130

$135

$140

$145

'13 '14 '15 '16 '17 '18 '19LTM

Average Daily Room Rate

84%

85%

86%

87%

88%

89%

90%

91%

'13 '14 '15 '16 '17 '18 '19LTM

Hotel Occupancy Rate

Las Vegas Strip Trends


-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

'07 '09 '11 '13 '15 '17 '19LTM

Gross Gaming Revenue

Source: Nevada Gaming Control Board; Las Vegas Convention and Visitors Authority

0%

1%

2%

3%

4%

5%

6%

'13 '14 '15 '16 '17 '18 '19LTM

Average Daily Room Rate

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

'13 '14 '15 '16 '17 '18 '19LTM

Hotel Occupancy Rate

Annual GDP Growth and Financial Events

0

10

20

30

40

50

60

70

80

90

100

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

'71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19

Recession Annual GDP Growth

’74 Franklin Nat’l BK

’82 LatAm Debt

’87 Stock Market Crash

’90 S&L Crisis’00 Tech Bubble

’07 Subprime Crisis


Comparative Analysis of Periods of Expansion and Real GDP Growth

Recent expansion has been the

second longest period of economic

growth in history


Source: United States Bureau of Economic Analysis; Applied Analysis

Trough PeakDuration

(Qtrs.)

Real GDP Compound

Annual Growth Rate

Q1 1991 Q1 2001 41 3.6%

Q2 2009 To Date 40 2.3%

Q1 1961 Q4 1969 36 4.9%

Q4 1982 Q3 1990 32 4.3%

Q4 2001 Q4 2007 25 2.9%

Q1 1975 Q1 1980 21 4.3%

Q4 1949 Q2 1953 15 7.6%

Q2 1954 Q3 1957 14 4.0%

Q4 1970 Q4 1973 13 5.1%

Q2 1958 Q2 1960 9 5.5%

Q3 1980 Q3 1981 5 4.3%

AVERAGE 22 4.4%

In-Migration by StateCalifornia to Nevada

0

10,000

20,000

30,000

40,000

50,000

60,000

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Total In-Migration



-20%

-10%

0%

10%

20%

30%

40%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Annual Change


How Californians moving to Nevada are

changing the state’s politics

“But the net flow from the Golden State has swelled in recent years, as sky-high housing prices in the Bay Area and Southern California sent residents searching for drastically cheaper deals a few hours drive away in the expanding Reno or Las Vegas metropolitan areas…”

Date: August 12, 2019


As California loses people, a las vegas

suburb grows

“For Karina Nasir, leaving California for this booming Las Vegas suburb was the chance to escape commutes up to three hours. For Bill Clune, it is saving $5,000 a year on his water bill…”

Date: February 26, 2019


Nevada among top states for inbound moves,

study finds

“A large share of mostly younger, middle-aged people are looking to move to Nevada from California to escape the high housing costs…”

Date: January 2, 2019

U-Haul Prices in Northern Nevada

$1,187Price for a Truck and Tow from

San Francisco to Reno

$241Price for a Truck and Tow from

Reno to San Francisco


Source: U-Haul

U-Haul Prices in Southern Nevada

$1,063Price for a Truck and Tow from

Los Angeles to Las Vegas

$203Price for a Truck and Tow from

Las Vegas to Los Angeles


Source: U-Haul

Hachman Diversity IndexNevada

50

55

60

65

70

75

80

85

90

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19


Source: United States Bureau of Labor Statistics; Applied Analysis

More D

iverse

Investments in Nevada

$41.2 BTotal Planned and Under Construction

Investments in Nevada

$15.2 BNorthern Nevada

$26.0 BSouthern Nevada


Source: Applied Analysis


Reno-Tahoe International Airport Expansion▪ Planned, $1.6 billion expansion of Reno-Tahoe International Airport

▪ The expansion will include a new concourse, new rental car facility and renovations to the existing baggage claim and concourses


Park Lane▪ Under Construction, $500 million mixed-use development

▪ Phase one will add in a large apartment complex, phase two will add retail/hotel space, and phase three will add more residential space


Resorts World Las Vegas▪ $4.2 billion casino resort to be owned and operated by the Genting Group

▪ Under Construction and expected to complete in 2021


Allegiant Stadium▪ $1.9 billion, 65,000-seat stadium located near the Las Vegas Strip to be home of the Las Vegas Raiders

▪ Under Construction and expected to complete in 2020

Consumer Confidence IndexUnited States

112.2

170.9

0

20

40

60

80

100

120

140

160

180

200

'80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19

Recession Future Expectations Present Situation


Source: The Conference Board

Consumer Sentiment Index

0

20

40

60

80

100

120

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19


Source: University of Michigan

MINING THROUGH UNCERTAINTY

mining through uncertainty · 30/06/2019 · mining & logging other services government...

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