Nevada forum projects $541 million more revenue for 2018-2019 budget cycle
The governor and Legislature will have $541.3 million more to spend in the coming budget cycle than they did in the 2015 session.
Economic Forum on Tuesday projected a total of $7.89 billion in General Fund revenues for 2018 and 2019.
That’s after expected tax credits for economic development programs and companies including Tesla are deducted. Those tax credits are expected to consumer $142.5 million during the biennium. Without them, the available revenue would top $8 billion.
In comparison to previous forum meetings over the past eight years, members were reasonably optimistic about the state of Nevada’s economy.
“We’re seeing increases in anticipated tax revenue across all categories we saw,” said Chairman Ken Wiles following the day-long meeting. “We’ve certainly seen a dramatic rebound since the recession. We seem to be on a sustainable growth path.”
Member Matt Maddox, an executive with Wynn Resorts, said Strip resorts are seeing more customers returning, and expecting an influx of Chinese customers now Hainan Airlines is serving Las Vegas.
Forum members projected a total of $3.875 billion in Fiscal 2018 and just more than $4 billion in Fiscal 2019.
That’s $541,305,374 more than the projections used to build the current two-year budget. Together, those numbers total $7,887,278,614, well above the 2015-16 projection of $7.345 billion.
The biggest chunk of that increase is in the sales and use tax projections they agreed should increase by more than 5 percent each coming year. Over the biennium, that’s an increase of more than $237 million to $2.3 billion. The gaming revenue, Nevada’s second largest General Fund revenue stream, was projected to grow by more than 5 percent as well, bringing in better than $1.5 billion along with some $222.5 million from the Live Entertainment Tax. The Insurance Premium Tax is projected to generate another $788 million and the Modified Business Tax more than $1.2 billion in the coming two fiscal years.
Staff told the forum members they’re confident about most of their projections but less so in the case of the new commerce tax. Guindon said they don’t yet have even one full year of that tax to base projections on, although he said it’s coming in well ahead of the $120 million projected during the 2015 Legislature. So far, it has brought in $143.5 million but he said that should reach $165 million when the books are closed. The forum agreed to project $181 million for 2018 and $190 million for 2019.
But he reminded members businesses can offset fully half those amounts, deducting that from their Modified Business Tax payments.
Members said with the election of Donald Trump, there are some significant uncertainties on the horizon, especially in health care costs, which generate a large portion of the Insurance Premium Tax. Marv Leavitt asked what happens if the Affordable Care Act is repealed.
Legislative economist Michael Nakamoto told him it depends on what the Trump administration replaces it with. Economist Russell Guindon said he has been hearing the new administration wouldn’t actually repeal Obamacare but would keep it, “until they have their plan in place.”
“This is where there’s the greatest regulatory uncertainty,” said Wiles.
The forum is a five member panel of financial experts appointed by the governor to project state revenues. Its projections must be used by both the governor and Legislature to build the budget. If the executive or legislative branches want to spend more than the forum says will be available, they have to approve a tax to pay for the difference.