Economic Forum makes preliminary revenue cuts
Nevada’s Economic Forum made its first round of revenue forecasts, chopping $93.6 million out of what they expect Nevada to get from taxes and fees this year.
The five-member panel will meet in December to finalize projections. Those numbers are then used by the governor as a basis for his expense budget for the next two years.
Gov. Kenny Guinn already has made budget cuts to match lower revenues coming in this year. The projections for the coming two-year budget cycle are probably of more concern to him because lower revenues from existing sources will increase the amount he has to raise in new taxes.
Hardest hit was the gaming percentage fee, which generates more than a third of state general fund revenues.
Not only did forum members reduce this year’s expected revenues $41.9 million to $604.6 million, they adopted pessimistic projections for the next two years as well, projecting growth rates of only 3.7 percent in fiscal 2004 and 4 percent in 2005.
“I’m not excited about any of these numbers,” said forum member Ron Zideck, moving for the conservative gaming projections.
Bill Anderson, economist for the state budget office, argued for somewhat higher rates than the Gaming Control Board or the legislative fiscal division. But he admitted the gaming revenues weren’t likely to fully recover soon.
“Everybody agrees we’ve lost a year of total revenue growth and we’re not going to get that back,” he told the forum.
“We all agree there’ll be this recovery,” said Russell Guindon of LCB. But he said it won’t come fast or as dramatically as the huge growth that followed the 1992 economic slump.
And members generally agreed with new forum member Deborah Pierce that they need better handle on the impact Indian gaming will have on Nevada casinos.
The forum consists of financial professionals appointed by the governor and Legislature to estimate state revenues. Its projections must be used by the governor and lawmakers in building the state budget.
The sales tax projections they agreed upon 18 months ago also took a hit, dropping by $33 million to $687.8 million this fiscal year.
But Anderson had more success convincing members to back more optimistic sales tax projections for the next biennium. The panel voted to project 5.1 percent and 5.6 percent increases over the next two years. That is still far less than the 10.3 percent increase originally projected for 2003.
Also revised down were projections for business license taxes, casino entertainment taxes and cigarette taxes.
The only revenue source on the “big six” list to go up was the insurance premium tax, which the forum members agreed to increased $5.7 million this year and 7 percent in each of the coming two fiscal years. That tax, assessed on every insurance policy written in the state, is expected to generate $167.3 million this fiscal year.
But the “big six” were reduced a total of $75 million.
Other smaller revenue sources also took a hit in new projections, dropping several million dollars.
But the biggest dip among other revenue sources was in the $15.7 million projected in May 2001 for interest income from state investments and bank accounts. The new interest estimate for this year is just $5.4 million, a drop of $10.3 million.
Together, those cuts will reduce the $1.9 billion total revenue forecast by the forum in May 2001 to $1.8 billion.
The group meets to finalize its revenue estimates Dec. 2.