State’s revenue outlook improves
Lawmakers were told on Thursday the state’s revenue picture has improved quite a bit since December.
LCB Economist Russ Guindon told the Interim Finance Committee in December the Economic Forum was warned the state’s revenues were $27.8 million below the forecast used to build the state budget.
Now, with more than half of Fiscal Year 2016 in the bank, he said that shortfall has decreased to just $4.3 million. That means the state has come within two-tenths of a percent within the $2.1 billion projection made in May 2015.
Assembly Majority Leader Paul Anderson, R-Las Vegas, said coming within a fifth of a percent in a $2 billion total projection is “amazing.”
Guindon said the problem is the sales tax, which, through seven months of the fiscal year is $10.6 million or 1.7 percent below projections.
That’s more than offset by gaming tax revenues that are $17.6 million or 3.5 percent above the forum’s May number.
The Gaming Live Entertainment Tax was $3.9 million above projections and the Real Estate Transfer Tax $3.4 million higher than estimated.
The Insurance Premium Tax and Modified Business Tax were also above projections, setting total revenue collections for the state’s seven major revenue streams at $1.67 billion to date — $18.8 million or 1.1 percent ahead of projections.
But but those gains were eaten up by a series of shortfalls in the next 10 largest state revenue sources which, together, were $20.4 million under forecasts.
The cigarette tax to date is $10.2 million below the forecast amount. Lawmakers raised the tax a dollar per pack and Guindon and members including Assemblywoman Robin Titus, R-Smith Valley, pointed out increases tend to reduce consumption. But Guindon said there’s another factor working there because the higher tax took effect July 1, which prompted wholesalers to buy a large number of extra tax stamps in May and June before the increase.
A similar situation happened with the changes to the Live Entertainment Tax collected by non-gaming properties. That higher rate took effect October 1, so many properties sold event tickets before the increase. The result is collections are 9.1 percent below projections — a difference of about $10.9 million.
The amount of the entertainment tax collected from escort services, he conceded, is well below any projections because escorts simply aren’t paying.
“It isn’t coming in at what we thought,” he said.
Assemblywoman Maggie Carlton, D-Las Vegas, said the state can’t allow a group just decide they’re not going to pay a tax.
Finally, collections for all other General Fund revenue streams are $2.7 million under estimated collections to date.
When all those numbers area put together, the state is $4.3 million below forecasts used to build the budget.