Economic Forum: Modest improvements will continue
The panel of five experts charged with projecting state revenues got its first review Friday of how those revenues are expected to perform in the coming two fiscal years – and the operative word throughout the day-long presentation of staff analyses was “modest.”
Experts including legislative economist Russell Guindon, Nevada budget office economist Janet Rogers and Deputy Taxation Director Sumac Maser made presentations on each of the so-called major revenue sources that generate three-quarters of the roughly $3 billion a year coming to the state General Fund.
Those are the sales tax, gaming percentage fee and gaming’s Live Entertainment Tax, the Insurance Premium Tax, Modified Business Tax and Real Property Transfer Tax.
The five-member Economic Forum also heard from Department of Employment, Training and Rehabilitation economist Bill Anderson and state Demographer Jeff Hardcastle on the labor market and the state’s population projections.
“We certainly haven’t dug our selves out of the hole,” said Anderson. But he and the others said Nevada can generally expect continued modest improvement in the economy through fiscal 2015.
“What’s holding us back is, really, construction and the public sector,” said Anderson, pointing out continued job losses in construction and projections that state and local government will shed another 1,500 jobs before bottoming out in the next two years.
The panel will meet again Nov. 30 to finalize revenue projections for the rest of this fiscal year and for the coming budget cycle of fiscal 2014-2015.
The largest chunks of state revenue come from the sales tax – nearly a third of the total – and gaming which, between the percentage fee and live entertainment, also generates about a third of the total.
Projections for sales tax revenue were generally low for the rest of this fiscal year but improving in 2014 and 2015. Rogers pointed out that sales tax revenue has seen 26 straight months of year-over-year growth. But she and Guindon cautioned that a significant amount of sales tax growth can be attributed to one-time projects like the Ruby pipeline across northern Nevada.
Gaming tax projections were also low this fiscal year but, like sales taxes, better for the coming two years.
Rogers said she sees some improvement in the insurance premium tax because President Obama’s re-election means the Affordable Care Act with its mandate that everyone purchase insurance isn’t facing Republican repeal.
Most of those growth projections were in the 3.5 to 5 percent range.
Guindon told the forum members there is also a gap between the increase in taxable sales and the increase in collections from those sales caused by the renewable energy credits given companies and the STAR Bonds projects in Washoe County.
“They may generate taxable sales but may not generate collections,” he said.
But he said the energy credits end after three years so he and the others may be able to re-project revenues from sales taxes upward when the forum meets Nov. 30.
Analysts said they expect the business tax to improve since taxation officials are seeing more businesses opening up again – but they aren’t expecting dramatic recovery this coming budget cycle.