Minor rise in major revenue for state
The Economic Forum heard from agencies, the fiscal division and budget office Friday it can expect the state’s major revenue streams to be flat or a bit down for fiscal 2016, generating about $2.5 billion for the General Fund.
But the experts told the five member panel things will be better in fiscal 2017 — increasing by anywhere from $92 million to $133 million.
Overall, that would result in an increase of anywhere from $89.6 million (the total of agency projections) to $268.6 million (the Fiscal Division’s total) over the coming biennium.
The forum’s job is to decide whose projections to adopt — or to split the difference between the estimates provided by analysts.
The most dismal projections were for the gaming percentage fees, Nevada’s second largest revenue producer. For the remainder of this fiscal year, that revenue stream was expected to rise by less than 1 percent by fiscal, budget and gaming control. For the coming biennium, the agency itself and fiscal were more optimistic, projecting a biennial increase of more than 4 percent, but budget remained skeptical seeing just a 1 percent overall rise in total funding.
The gaming tax is expected to generate about $1.4 billion during the biennium.
The forum met Friday to hear what the experts believe was going to happen in the coming two years. No actual projections were made Friday. The Forum members will meet again Dec. 3 to actually project state revenues.
Those projections must be used by the governor and lawmakers in developing the state budget for the next two fiscal years.
In reviewing the gaming revenues, member Matt Maddox, Chief Financial Officer for Wynn Resorts, said the gaming tax is difficult to project because it’s so tied to the profit or loss from one game — Baccarat.
“On the Las Vegas Strip, 25 percent of our business is Baccarat,” he said. “That’s multi-millions coming out of a few hundred people.”
All analysts — budget, fiscal and Taxation — were more optimistic about the sales tax seeing anywhere from an 8.3 to 12.4 percent increase in total revenue over the coming biennium.
Sales tax is the big money maker for the General Fund, raising more than $2 billion over the biennium by all three accounts.
Overall, the analysts said they believe the state’s seven major revenue sources will see modest but solid increases over the coming two-year budget cycle.
In addition to sales and gaming taxes, those include the Insurance Premium Tax, Gaming Live Entertainment, Real Property Transfer Tax, Modified business Tax and Modified Business Financial Tax.
Among the “majors,” other than sales and gaming, the Real Property Transfer Tax is expected to bring in anywhere from $135-$145 million, the Insurance Premium Tax up to $600 million and the Gaming entertainment tax $275-$300 million for the biennium. The two business taxes combined are projected at $576-$614 million.
In addition to those revenue streams, there are about 70 so-called “minor” revenue streams that, a week ago, were projected to produce just about $940 million.
One reason the forum didn’t project revenues Friday is when it meets in December it will have an additional quarter of revenue statistics for not only those minor revenues but several of the majors including the Insurance Premium Tax that are reported quarterly, not monthly.
Taxation Director Chris Nielsen said those additional figures will help refine the projections for the forum.
The forum was created in the 1993 Legislative session after projections developed independently by the administration, legislature and others proved woefully inadequate and inaccurate. The idea was a five-member panel of business and other financial experts who would take the politics out of setting revenue projections for the state to use in budgeting. Its members are appointed by the governor, Senate and Assembly leadership.