Nevadans saw their personal income decline more in 2009 than residents of any other state, a new report from the U.S. Bureau of Economic Analysis found.

Residents’ personal income in Nevada fell to $102 billion in 2009, down 4.8 percent from $107.1 billion in 2008. That’s not only the worst performance in the nation in 2009, it’s also the second-biggest decline among the states since 1969, the bureau said. Total personal income gauges the combined earnings of all residents in the state. Nevada has always had one of the country’s lower overall personal incomes, because it’s one of the country’s smallest states.

It seems a classic “killing the golden goose” scenario.

Nevadans’ personal income is a function of jobs. Jobs is a function of the economy. The economy grows (and jobs are created) when taxes are not raised. The economy shrinks (and jobs are lost) when taxes are raised. It’s not just government taking away the money that the economy uses to pay for new jobs; just as harmful, it’s what our government does with its money and power: increased regulation presents impossible hurdles for some new businesses; Legislators push Nevada’s minimum wage up higher than our surrounding states, creating a predictable migration of jobs; tax-happy leaders continue to advocate that taxes be raised higher still, scaring away all the small businesses fleeing California to settle in Utah, Arizona, Colorado, Idaho and Texas.

Here’s the complete study, and here are some important highlights:

• Bigger government damages a state’s economy.
• Nevada’s tax structure is generally good for the economy because it offloads a good chunk of the cost of running government onto tourists and companies who cater to tourists (who merely pass their tax burden onto their tourist customers).
• Nevada ranks medium to high on lists that compare tax burdens on residents – again, because Nevada offloads its cost of government onto visitors.

Ralstonian math doesn’t consider government spending a valid measure of government (!). Instead, it only measures how much taxes residents pay. By that measure, Nevada fares poorly.

And that’s the continual harping you’ll hear from those who use Ralstonian math – mostly government unions, socialists and people who curry favor with elected officials in order to trade political influence for a living.

(Full disclosure: ALEC named the webmaster one of a handful of its “State Legislators Of The Year” a couple of years ago).

No doubt the Confused Wing of Nevada’s political and press corps will again complain that we need to raise taxes in Nevada, rather than do what all the other states are doing (which is reducing spending in line with revenue).

The Las Vegas Review Journal reports the story…

The Census Bureau says the Metro area hit 1.866-million last June 30, vs. local government estimates (passed up to the State Demographer before becoming “official”) that had us at just under 2-million. The difference is more than six percent, equal to three years of our current pace of 2% annual growth.

Cities and Counties in Nevada are incented to exaggerate growth because each jurisdiction’s population is a primary factor in determining how much of the state’s “Consolidated Tax Distribution” they get.

CTX, as it is known in government finance circles, is a complex formula that divvies up a group of state taxes including the car registration tax, liquor taxes, and cigarette taxes.

If Henderson, for example, has more people than North Las Vegas, then Henderson gets a bigger piece of the pie and North Las Vegas gets a smaller piece of the pie. As a result, all local governments exaggerate. Every ten years, they have to drop down to the official census count.

The unfortunate side effect of exaggerating growth is that anti-family lawmakers point to the exaggerated population counts and claim they need to raise taxes on existing Nevada families in order to provide government services to pretend people.

“I find it disturbing this state that has essentially been my life is, in my opinion, on the brink of disaster. You can’t cut 34 percent or more without devastating state government”… Rocha fears legislators in the coming session will cut state spending so severely that it might take decades for his and other agencies to recover.

This is a little melodramatic. The latest estimates of Nevada’s tax revenue for the next two years is that state tax revenues will be about this same for the two years starting July 1, 2007 as it was for the two years starting July 1, 2005, and that it will be about the same for the two years starting July 1, 2009. Our flat revenue is much higher than revenue was for the two years starting July 1, 2003, and that number was swollen with the largest tax hikes in many decades passed by the 2003 Legislature. Later, Rocha notes he was a history major.

Rocha parts with this:

Rocha also criticized the state’s tax structure, saying it relies too much on tourist-generated revenues and leads to wild swings in the state’s financial health.

“We need a 21st-century Nevada, and it can’t rely on tourism to keep driving the engine,” Rocha said. “Tourism will no longer be able to sustain state government unless people are satisfied with a government so small it can’t do very much at all.”

All the available evidence indicates that our ability to export taxes to visitors has led to greater tax structure stability for Nevada, rather than wild swings. The current economic downturn (the private sector is down and losing jobs while the public sector is flat and not losing jobs) started with the “locals” economy of residential construction, and for many months tourism continued to do well, and the 2001 downturn was much less severe in Nevada than most states due to how quickly tourism rebounded.

New Census Bureau estimates say seven states have growth rates faster than Nevada’s.