By SCOTT SONNERSPARKS, Nev. (AP) â¿¿ With Nevada's unemployment at its lowest level in more than three years, Gov. Brian Sandoval said at an annual tourism conference Tuesday that he is confident the state's economic rebound is gaining steam, but believes challenges remain. "I continue to believe Nevada's best days are yet to come," Sandoval said in a speech to about 250 people at the 2012 Governor's Conference on Tourism in Sparks. "Our work of course is not yet finished," he said, underscoring the importance of the travel and hospitality sector that employs 447,000 Nevadans â¿¿ 30 percent of all employment in the state. In his speech, Sandoval said he's making promotion of tourism a priority at all agencies, economic development and transportation, to state parks, wildlife and cultural affairs. But he acknowledged in an interview before his speech kicking off the two-day conference that state budget conditions will make it difficult to step up spending. The governor is calling for state agencies to prepare flat budgets for the coming two-year budget cycle. He's to present his budget plan to state lawmakers in January, before the Nevada Legislature convenes Feb. 4. Sandoval is a popular first-term Republican and former federal judge who addressed the GOP National Convention this summer. Nevada has dealt with chronic unemployment since he took office, but Sandoval noted that the situation is improving. "Unemployment has dropped from over 14 percent to 12.5 percent. We are the fastest recovering state in the country when it comes to improving unemployment. It still is unacceptable, but we do lead in improvement," he said.