The Economic Forum will be told next week the General Fund will get a $138.1 million boost in the upcoming budget cycle as the tax credits now going primarily to Tesla expire.
Legislative Counsel Bureau Economist Russell Guindon told the Technical Advisory Committee (TAC) to the Economic Forum that Tesla during this biennium received a total of about $115.8 million in transferable tax credits through the Economic Development credits and $45.2 million from the New Market Jobs credits. He said Tesla will have almost completely used up those credits granted the company in trade for locating its Gigafactory at the Tahoe Reno Industrial Center by June. With those and other reductions, the total projected tax credits that take away from the General Fund will fall from $201.7 million this biennium to just $63.6 million in the coming budget cycle.
TAC members approved revenue projections for the more than 50 so-called “minor” revenue streams that feed the General Fund totaling $1.42 billion over the next two years.
Those projections will go to the Economic Forum itself on Dec. 3. The forum is the parent body that will then project revenues for the seven major revenue streams that make up the majority of the General Fund — the sales tax and gaming percentage fees, Modified Business Tax, Live Entertainment Tax, Commerce Tax, Insurance Premium Tax and Real Property Transfer Tax.
Before the reductions attributed to ending and declining tax credits, the so-called minor revenues were actually projected to fall $18.8 million short of the current budget cycle, primarily because a projected $41.2 million in Governmental Services Tax is being directed back to the Highway Fund instead of the General Fund. In addition, projections are revenues from the cigarette tax will continue to decrease, costing another $17.8 million.
The Economic Forum is expected to project total General Fund revenue in excess of $8.5 billion for the 2020-2021 budget. That’s almost $1 billion less than the $9.4 billion agencies have asked for.
The forum projections must be used by the governor’s office and Legislature to build the biennial budget unless they agree to raise or create new taxes to cover the difference.