Nevada’s Economic Forum told revenues depend on stimulus and vaccine
The Economic Forum was told by experts Tuesday that the General Fund revenues they can expect for the coming biennium hang completely on whether Congress approves another stimulus package and how soon a coronavirus vaccine is available.
Like other economists, Russell Guindon of the Legislative Counsel Bureau said they expect a vaccine to be available in the first or early second quarter of 2021. He said they expected an added stimulus early next year as well.
All the analysts who presented their projections Tuesday say both the vaccine and stimulus package are vital to Nevada’s continued recovery.
The five-member forum heard presentations on each of the seven major revenue streams from LCB Fiscal, the Governors Finance Office, Taxation, Gaming Control and the Department of Employment Training and Rehabilitation as well as Moody’s Analytics and a number of organizations including the Nevada Resort Association, Nevada Retail Association and Realtors Association.
The panel made no formal projections at this meeting. The panel will make projections at a Dec. 3 meeting. Their projections must be used by the executive branch to develop the governor’s proposed General Fund budget for the coming biennium.
Dan White of Moody’s, a national consulting firm, said a vaccine is critical to restoring visitors who come to the state by air.
“Air visitors spend a lot more money than those who drive in, especially the international visitors,” he said.
He and Virginia Valentine, head of the Nevada Resort Association, said air travel is also the key to bringing back mid-week visitation that depends on conventions, entertainment events and trade shows.
Valentine said without those visitors, some hotels in the south are only open on weekends because of the lack of business.
She said there is demand for those things but that travel restrictions are not in Nevada’s control.
“Obviously a vaccine is a game changer,” she said. “Large events, that is the key for bringing people back.”
“A lot of core industries in Nevada are designed around bringing large groups of people together,” White said.
Forum Chairman Craig Billings agreed. He pointed to the fact that gaming that relies on drive-in customers from around the west has rebounded very well since casinos reopened.
Mike Lawton of the Gaming Control Board amplified his comments saying that segment of the gaming market, aided by stimulus money pumped into the economy and customers driving to the state has several markets including Washoe County, South Lake Tahoe and Carson City actually ahead of where they were before the pandemic in September.
Guindon, Valentine and Lawton all said one major revenue source, the Live Entertainment Tax, has been all but wiped out because major shows and other events have been prohibited since the pandemic forced a shutdown.
Brian Wachter representing the retail association said the 8,600 businesses that qualify as retail badly need to be able to open up more so a vaccine and stimulus money would help them get back on their feet.
Hayley Owens of the Taxation Department, Guindon, Suzanna Powers of the budget office and other analysts all said they expect revenues to begin recovering in fiscal 2022 and increase significantly in 2023.
Owens said that includes the sales and use tax revenues that are the largest piece of Nevada’s General Fund revenue stream at better than $1.2 billion a year.
The second largest is the taxes on gaming led by the gaming percentage fee — the tax on gross casino revenue, that is expected to generate upwards of $700 million by fiscal 2023. But gaming also pays a dozen or more other licenses, fees and levies.
The other major revenue sources reviewed Tuesday are the Modified Business Tax, Insurance Premium Tax, commerce tax and Real Property Transfer Tax.
But there are another 70 different taxes, referred to as the minor taxes such as tobacco and liquor taxes that feed into the General Fund as well.