Nevada lawmakers given $6.3 billion revenue projection to work with
CARSON CITY — Nevada’s Economic Forum on Friday projected $6.3 billion in general fund tax revenue for the upcoming two-year budget cycle, a forecast that changed little since the panel last met in December.
The forecast from the five-member forum of independent fiscal experts must be used by state lawmakers to balance the budget before the 2015 Legislature adjourns June 1.
The $6.3 billion anticipated from sales, gaming, business, mining, insurance premium and other taxes is about $1 billion less than Gov. Brian Sandoval’s proposed $7.3 billion general fund budget. Sandoval has proposed filling the gap with new and extended taxes.
“The Economic Forum provided many positive economic indicators but in order to move Nevada forward, we must change our revenue structure,” Sandoval said in a statement.
“It is my job to be honest with the people of Nevada about our entire economic outlook,” the governor said. “Our current revenue structure is not capable of fulfilling the demands of our growing population and not adequate to achieve the priorities and principles of the new Nevada.”
For the first time, forum members also factored in tens of millions of dollars in tax credits doled out in recent years to lure new industries such as Tesla, encourage film production and donations to scholarship programs.
Tesla alone could obtain up to $45 million in tax credits in each of the next two years, a perk approved by lawmakers during a special session in the fall to lure the electric car maker’s $5 billion battery factory to Northern Nevada.
“Ultimately those credits will be a dollar-for-dollar reduction,” said Ken Wiles, forum chairman.
Legislative fiscal analysts said tax credits could total $78.8 million next year and $74.5 million in 2017. If all available tax credits were taken in those years, total revenue would fall to about $6.15 billion.
Forum members also paused over projections for gaming taxes, citing volatility in China and other international markets that have resulted in deep declines in baccarat volume on the Las Vegas Strip.
Matt Maddox, president of Wynn Resorts and a forum member, said the volume of baccarat on the Strip is down about 30 percent and he predicted continued declines in the near future.
The highly-volatile game is favored by Asian players, and Nevada’s monthly casino wins often rise or plummet based on baccarat action.
The forum settled on gaming tax projections of $698.7 million in 2016 and $716.2 million in 2017, representing flat increases of 1.9 percent and 2.4 percent, respectively.
Nevada can also thank President Barack Obama’s health care reform law for helping to boost revenue from insurance premium taxes. Because everyone is required to have health insurance, revenue from those taxes jumped nearly 12 percent in the current fiscal year and are projected to increase another 10 percent in both 2016 and 2014, bringing in $679 million.
Despite some concerns in the gambling arena, experts sounded upbeat on Nevada’s economy overall.
Bill Anderson, chief economist for the Nevada Department of Employment, Training and Rehabilitation, said the state has added 13,000 jobs since the fall, and is on track to regain pre-recession numbers.
Nevada, he said, maintains the third-fastest job growth rate in the nation, a marked turnaround from the Great Recession when the state lost 175,000 jobs.
“We think come mid-2016 we will have all of the jobs lost during the recession, which will certainly be a big milestone,” Anderson said, predicting the state could add another 100,000 jobs by mid-2017.
“Most indicators are either stable or pointing in a positive direction,” Anderson said.
Economists were bullish on sales tax revenue, projecting increases of 5.7 percent and 5.5 percent in each of the next two years for a combined total of $2.2 billion.
Economists with Moody’s Analytics said tourism in Nevada is up, job growth exceeds the national average and home prices have rebounded since the recession, though wages continue to lag.
“The economy has plenty of room to stretch,” said Moody’s economist Sarah Crane.
Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.
