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RENEE MONTAGNE, HOST:

The recession has been over officially since 2009 - not that you can tell in many places in America. The effects of the downturn have been particularly cruel in Nevada.

STEVE INSKEEP, HOST:

That's right. The state has the nation's highest unemployment rate and highest foreclosure rate. And to say the least, all of this has made the state's budget situation difficult.

MONTAGNE: As we continue our look at state finances, NPR's Carrie Kahn tells us about Nevada's hopes of broadening its tax base beyond the mainstays of tourism and gambling.

CARRIE KAHN, BYLINE: It's noon on the Las Vegas strip, and the barker outside O'Shea's Casino is hard at work.

UNIDENTIFIED MAN: Twenty-four-hour happy hour, 24-hour $5 black jack...

KAHN: Dressed in a lime green tuxedo, he's doing his best to get the tourists to come on in.

UNIDENTIFIED MAN: ...24-hour beer pong action going on right here today inside O'Shea's...

KAHN: Nearly 39 million visitors came to the city last year, the second highest number in Vegas history. The problem is those tourists don't have as much money as they used to. Genina Jackson says she's noticed that.

GENINA JACKSON: Ten years ago, well, people dressed up a little bit more. I see a lot of jeans and flip-flops.

KAHN: She stopped me on the Strip in front of the huge fountains at Cesar's Palace to take a picture of her and her friend Melissa. They're in from Atlanta. It's Melissa's birthday.

JACKSON: The casinos are not as crowded. You can get to any table. Before, 10 years ago, you couldn't get to a table.

KAHN: The city had a great ride since Jackson was last in Vegas. For most of the past decade, Southern Nevada was the fastest-growing region in the nation. Mo Denis, a Democratic state senator, says in the city, they were opening a new school every 20 days.

STATE SENATOR MO DENIS: We built 18 high schools, 33 middle schools, 60-something elementary schools in an eight-year period.

KAHN: Denis says the bust has been equally dramatic. Unemployment hovers around 13 percent, and nearly half of all the homes sold in state are in foreclosure. That's had a huge impact on the state's budget. Legislators had to close a multi-million dollar deficit last year. To do it, they left in place some old tax hikes and also made big cuts to education, prisons and healthcare.

David Damore, a political scientist at the University of Nevada, Las Vegas says the budget battle got people to start looking for new revenues beyond gaming and tourism.

DAVID DAMORE: So you're starting to get people to realize that, OK, well, maybe we need to start thinking about this, here. And, you know, that's revolutionary thinking, here.

KAHN: One place eyes are turning: the state's lucrative mining industry. Nevada extracts nearly 80 percent of all the gold mined in the United States, yet those companies pay lower taxes than casinos and hotels, tax rates the industry wants to protect.

(SOUNDBITE OF ADVERTISEMENT)

UNIDENTIFIED MAN: Look who benefits from Nevada mining, because mining creates more than 50,000 jobs.

KAHN: It recently launched a PR campaign touting its contributions to the state.

(SOUNDBITE OF ADVERTISEMENT)

UNIDENTIFIED MAN: In good times and hard times, mining is working for Nevada families, working for you.

KAHN: Steve Hill, the governor's new Economic Development head, says taxing a specific industry that's booming is easy. But what happens when it, too, hits a lull?

STEVE HILL: You're probably setting up the possibility that down the road, that industry's not doing so well, and what you thought was a stable revenue stream is not anymore.

KAHN: Hill says the state needs to move now to attract new industries, high tech, specialized manufacturing and health care.

HILL: There is a sense of urgency right now that you can't duplicate when times are good.

KAHN: But Nevada's legislature only meets once every other year, and this is an off year. So instead of new initiatives, the state is set to take out a $160 million loan to get through the year.

Carrie Kahn, NPR News.

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