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Sales taxes lag behind projections

Sales tax collections continued to lag behind projections used to build the budget for January, reporting just nine-tenths of a percent growth over the same month last year.

The news added an exclamation point to Wednesday’s announcement by Gov. Jim Gibbons that he was ordering budget cuts because the sales tax isn’t performing like the Economic Forum predicted in November.

He said analysts believe revenue projections will have to be reduced about $112 million when the Economic Forum meets in May and ordered agencies to begin looking for places to cut.

Total taxable sales for January were $3.67 billion, leaving state revenue collections $13.4 million below what they were forecast for the first seven months of this fiscal year. At that rate, they will finish the fiscal year about $30 million below projections.

But the slump also affects the portion of sales taxes going to the school districts, which is larger than the state’s portion. It will take another $81 million for the state to make up the shortfall to the schools, for a total of $111.8 million.

The slump in the housing and construction industries accounted for much of the problem. Sales of building materials and supplies fell 22.4 percent to $212.8 million. Furniture sales were down 60 percent to $89.3 million and taxable sales from building construction down 38 percent to $11.9 million.

But other categories were also in the red compared to the same month of 2006.

Motor vehicle sales were off 10.8 percent to $434.7 million and food services and drinking establishments 16 percent to $592.6 million for the month.

Seven of the 17 counties reported a decrease in taxable sales including Washoe which was down just under 1 percent. Clark was up, but only by 1 percent.

Carson City reported an increase of one-half percent in taxable sales to $73.4 million for January. The capital’s largest category, motor vehicle and parts dealers, was up a solid 13.8 percent to $25.1 million. But like the rest of the state, construction and housing categories fell. Building materials and supplies sales were down 25 percent to $4.6 million, furniture stores down 40 percent to $1.4 million.

Douglas County reported a 6.4 percent drop in sales to $55.4 million, and again the culprit was the construction market. Building materials and supplies there fell just over 17 percent to $5.8 million. And Douglas didn’t get any help from the casinos at Stateline, which were down nearly 2 percent from a year ago at $13.3 million.

Lyon County suffered a major drop in building materials sales from $5.6 million to $2.8 million and furniture sales went down 40 percent to $849,793. But Lyon’s amusement, gaming and recreation category also took a big hit in January as taxable sales fell from $1.3 million to $345,084. Overall the county was down more than 23 percent compared to the previous January.

In contrast to most of the state, Storey County reported an increase for the month of 243 percent from $4 million to $13.8 million. The biggest share of that increase was taxes reported by specialty trade contractors where collections went from less than $700,000 to $5.8 million.

Heavy and civil engineering construction went from $5,867 to $759,365 in collections. And professional, scientific technical services from $681 to more than $2.6 million.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.