Economic Forum: $580 million must be cut from budget
The governor and Legislature will have to cut nearly $600 million from the current budget to meet reduced revenue projections issued by the Economic Forum Friday.
The forum, called into special session by Gov. Jim Gibbons, reduced projections for the 10 major general fund revenue streams for the current fiscal year from $2.6 billion to $2.36 billion in this fiscal year and from $2.66 billion to $2.32 billion in fiscal 2011.
That translates to a two-year reduction of $580 million for the biennium.
Sales and use taxes, gaming and the Modified Business Tax took the biggest reductions. Sales tax projections were cut nearly $71 million for this year and more than $112 million in the second year of this budget cycle.
When the Live Entertainment Tax is counted, projections for total gaming revenues were reduced nearly $158 million this budget cycle.
The business tax projection fell $142 million over the biennium.
The governor and lawmakers are required to use the forum’s regular meeting projections in building the state budget. While it wasn’t clear that they are absolutely required to use the projections generated in this special meeting, several officials said they would undoubtedly do so.
The forum session was called after revenues fell some $72 million below the May 2009 projections in just the first three months of the two-year budget cycle.
Every major general fund revenue source was chopped back except the financial section of the Modified Business Tax – which is applied only to banks and other financial institutions. While analysts projected that revenue would actually grow a bit over the May projections, it only generates about $20 million a year.
The Insurance Premium Tax lost nearly $30 million over the two-year cycle and the secretary of state’s corporate fees about $13 million. Room tax revenue projections were reduced by some $32 million by the forum and the Real Property Transfer Tax by just over $7 million.
The governor and lawmakers will use the new projections in deciding how to balance the state’s budget when Gov. Jim Gibbons calls the Legislature into special session to deal with the shortfall.