The rebound in Nevada’s domestic tourism industry and the injection of federal aid related to COVID-19 has led Moody’s Investors Service to revise the state’s outlook from stable to negative.
Las Vegas welcomed nearly 2.9 million visitors in May, up 11.8% from April, but still down 22% from May 2019, according to the Las Vegas Convention and Visitors Authority.
The tourism industry is the engine of the state’s two largest sources of revenue, sales taxes and gambling, which have seen notable improvements, Moody’s analysts said. In addition, the injection of substantial federal coronavirus relief aid has bolstered the state’s already improving liquidity situation and will provide a buffer in the event of unforeseen economic disruptions over the next year. “
The outlook revision applies to limited state tax obligations and rental income participation certificates.
The state has $ 982 million in GO bonds outstanding, $ 74 million in COP in outstanding rental income and $ 805 million in highway income bonds outstanding, according to Moody’s.
Moody’s also confirmed the Aa1 rating on government GO bonds, the Aa2 rating on COP rental income and the Aa2 rating on government highway tax obligations, including fuel tax obligations. motor vehicle and indexed tax and subordinate fuel tax obligations.
The rating outlook remains stable for its highway income bonds “reflecting sound debt service coverage provided by promised income despite income declines caused by the economic disruption caused by coronaviruses,” Moody’s said.
The stable outlook also incorporates the state’s ability to respond to revenue declines caused by the pandemic-related economic disruptions over the past 16 months through prudent fiscal management, including spending cuts, analysts said. from Moody’s.
Fiscal reserves which were completely depleted in May 2020 to cover the budget deficits forecast in fiscal years 2020 and 2021 are expected to be restored over the next two years through compulsory deposits determined by formulas linked to forecasted revenues and balances of unrestricted funds, Moody’s analysts said.