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November 23, 2014

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Business panel sets state spending at $5.3 billion

The Economic Forum emerged from its hibernation today, saw two more sour years for the state’s economy and settled that the governor and Legislature will have $5.3 billion in general fund revenue to spend for the next two years unless they raise taxes.

The number is about what state financial expected - somewhere between $5.2 billion and $5.4 billion. But the forum, made up of five appointed business leaders, made official that Gov.-elect Brian Sandoval and then the Legislature will have to balance that with state spending requests at $8.3 billion, which assumes a half billion dollars in furloughs for state workers ends.

“Now the game is on in terms of these are official numbers,” Russell Guindon, a legislative fiscal analyst told the Economic Forum on Wednesday.

The five forum members generally settled on a consensus that Nevada would not see any rapid recovery, and certainly no return to the salad days of 2006 and 2007.

Visitor volume to the Strip would increase, but folks wouldn't gamble or spend like they used to.

“This could be our Great Depression,” said John Restrepo, chairman of the Economic Forum and a private fiscal analyst. Changes in how consumers spend their money “could make this a game-changer for awhile.”

New Economic Forum member Andrew Martin, a CPA, said he wanted to be a bit more pessimistic than his colleagues, but said he was generally comfortable with the forecast.

The Legislature created the Economic Forum, which is appointed by the Governor and Legislative leaders, to take politics out of setting state revenue. Years ago, lawmakers had been known to push a more optimistic viewpoint on how much money the state would get so they could spend more without raising taxes.

Restrepo and other board members said no one has tried to influence the work of the nonpartisan panel.

Like other experts, the Economic Forum members struggled initially to forecast just how bad Nevada’s economy and tax revenue would get. Since 2008, there have been three special sessions to readjust for downward revenue.

But since February, the board members on the commission have been about right, even a little conservative, on their predictions.

Their new forecast has the current fiscal year ending with about $80 million more than they had previously predicted.

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