Economic Forum bumps up revenue projections — but not by much | NevadaAppeal.com

Economic Forum bumps up revenue projections — but not by much

Geoff Dornan, Appeal Capitol Bureau

The governor and lawmakers will have $3.88 billion in general fund money to spend in the coming two-year budget cycle.

That is the Economic Forum’s official projection of what the state’s existing revenue system will produce. By law, it must be used as the basis for the state budget.

Those forecasts, however, do nothing to cover the projected gap between what the existing tax system will bring in and the funding needed to maintain existing governmental services.

Gov. Kenny Guinn said Monday he’ll ask lawmakers for tax increases totaling more than $800 million to cover what state agencies need to maintain existing services.

The forum, a group of five business leaders appointed to review and project state revenues, was slightly more optimistic Monday than when it made preliminary forecasts at the end of October.

Overall, forum participants increased projections $6.1 million for the remaining seven months of this fiscal year and $12.2 million for the next biennium — a total of $18.3 million.

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“It appears things have gotten better more than I thought they would,” said forum member Leo Seevers.

That included small increases in the sales, gaming and casino entertainment taxes, and the cigarette tax. Sales taxes will raise $689.13 million by the end of this fiscal year and $1.49 billion over the coming biennium. Gaming and casino entertainment taxes will combine for a total of $674.3 million this fiscal year and $1.43 billion for fiscal years 2004 and 2005.

The cigarette tax should bring in $42.7 million this year and $87.6 million over the next two.

The forum decided to stick with last month’s estimates for the remaining major revenue sources. That includes $167.5 million this year and $370.9 million over the next two years in insurance premium taxes, and $79.5 million this year and $166.6 million the next two from the business license tax.

Those six revenue sources generate nearly 90 percent of the state’s general fund each year.

The forum adopted recommendations made by its technical advisory committee last week for the list of nearly 100 “minor” revenue sources. That includes increases in projected fees collected by the Secretary of State’s Office — $54.3 million this year and $113.8 million for the biennium.

Altogether, the “minor” revenue sources are projected to generate $204 million this year and $440.5 million in fiscal years 2004 and 2005.

Forum chairman Cary Fisher said some things outside the state’s control could affect revenues — such as the potential for war with Iraq, failure of the economy to recover as expected and the growth of Indian gaming in California. But overall, he said, he believes the forecasts will be close.

Guinn said the forecasts leave his administration only about $27 million in “new money.” He said the $800 million is needed to pay for the rising cost of maintaining existing services, including larger caseloads from Medicaid to more university and public school students and rising utility, insurance and benefits costs.

He added that doesn’t include any new or expanded programs.

“That’s not on our radar screen right now,” he said.

It also doesn’t include the more than $330 million deficit facing the state this fiscal year.

Guinn confirmed that his budget, due to go to the Legislature Jan. 4, will ask for some immediate increases in taxes, such as liquor and cigarettes, to help prevent more cuts in services this fiscal year.

Revenue forecasts approved Monday by the Economic Forum:

(In millions. Columns may not add up because of rounding)

FY2003 FY2004 FY2005

Sales and Use Tax $689.1 $724.2 $764.8

Gaming Win Tax $572.5 $593.6 $617.4

Casino Entertainment $68.7 $72.5 $76.8

Insurance Premium $167.3 $179 $191.5

Cigarette Tax $42.7 $43.5 $44.1

Business License Tax $79.5 $81.9 $84.6

Total Other Revenues $193.2 $201.3 $212.8

Total Revenues $1.81 billion $1.89 billion $1.99 billion