Economic forum meets Friday to estimate budget damage
In the face of a growing budget shortfall, the State of Nevada Economic Forum meets Friday to re-project general fund revenues.
General fund revenues fell more than $70 million below projections in just the first three months of this two-year budget cycle. Deputy Chief of Staff Stacy Woodbury told lawmakers earlier this week that shortfall could grow to $450 million if the economy doesn’t recover more quickly.
The crisis forced the Gibbons administration to ask agencies to prepare for additional budget cuts of up to 10 percent from their current budgets.
The forum, a five member panel of business experts appointed to help project how much money will be available for the state to spend each biennium, made its original budget projections for this cycle in December 2008. But declining revenues caused by the recession forced them to chop that projection back by about $230 million when they met in May.
That projection – just less than $5.5 billion over the two-year budget cycle – was the amount used to build the budget. But it has since proven far too optimistic as gaming and sales tax revenues continued their downward slide. Through October, gaming tax revenues were 13 percent below the previous fiscal year – a full percent below the May projections. Taxable sales also continued to fall dramatically.
The forum is expected to make significant reductions to its May projections in Friday’s meeting.
Gov. Jim Gibbons called the forum to help his administration and the Legislature determine how much more must be cut from state budgets to prevent the state from going into the red – which is prohibited by Nevada’s constitution.
The decisions about how much and what to cut will be made during a special session of the Legislature that Gibbons plans to call this spring. He has said when that session will convene depends not only on what the forum does but negotiations with lawmakers on how to handle the shortfall.
To prepare for that session, he has asked agencies to spell out what they would do to cut from 1.4 percent to 10 percent out of their budgets.
Meanwhile, economists and analysts in the Department of Taxation, Gaming Control, the Department of Administration and the Legislative Counsel Bureau’s Fiscal Division have spent the past three weeks preparing their best projections on how the different general fund revenue sources will perform for the rest of this fiscal year and through fiscal 2011.
In addition to gaming and sales taxes, new projections for revenue streams including the modified business tax, real estate transfer tax, insurance premium tax, live entertainment tax, Secretary of State’s corporate and business fees, the cigarette tax and liquor tax are being prepared for Friday’s meeting.
Joining the forum for the first time Friday will be Matthew Maddox, chief financial officer and treasurer at Wynn Resorts in Las Vegas. He replaces Kathy Santoro, who resigned after taking a position in Arkansas.