Experts: Nevada economy is strong

Tuesday, Nov. 26, 1996 | 11:59 a.m.

CARSON CITY -- A panel of Nevada business leaders predicts steady economic gains through 1999 despite a slowing of the gaming industry's growth.

The Economic Forum, headed by David Morgan, a Reno certified public accountant, projected Monday that the state in 1998 will receive $1.49 billion in tax revenue, a 10 percent increase, and $1.55 billion in 1999 for a 3.9 percent increase.

Gov. Bob Miller will use the forum's projections in building the 1998-99 state budget, which will be presented to the Legislature in January.

The forum's tax-revenue estimates are $31 million below what state Budget Director Perry Comeaux's office predicted, but they're $27 million above the forecasts of the Legislative Counsel Bureau.

Tax revenues from the gaming industry have been slowing this fiscal year and the forum sees only a 2.5 percent increase for 1997. But it sees a rebound for the next two fiscal years.

Forum member Steve Great house, chairman of Alliance Gaming, said the projected increases are "very significant" even though they are lower than what the state Budget Office is forecasting. The forum predicts a 5.8 percent increase in state revenue from the gaming tax in 1997, for a total of $482.2 million. In 1998, he said, the gaming tax revenue is projected at $513 million, for a 6.5 percent increase.

Much of the increase is built on the wave of new or expanded casinos that are expected to open in the next two years, including Bellagio in Las Vegas, which is billed as the most expensive hotel-casino ever built.

The forum also projects increases in casino entertainment tax revenue of 11 percent per year.

Sales tax revenues are expected to grow by 9.4 percent this year after three years of double-digit increases. The forum is predicting an 8.2 percent jump next year and 8.7 percent the following year.

Ted Zuend, economist for the Legislative Counsel Bureau, told the forum that auto sales have tripled in a three-year period, but added they shouldn't expect that rate to continue.

Zuend also said it is unlikely the construction industry will sustain its 18 percent growth over the next two years.

Car sales and construction are two of the biggest producers of sales tax revenue.

The expected $350 million more in general fund revenue for the state in the coming two years will allow only moderate growth in state services, Comeaux said.

Given school enrollment increases, the class-size reduction program will cost $130 million alone, Comeaux said. The state prison population is growing at 6-7 percent a year, he said, and the University and Community College System is predicting a 5 percent enrollment increase.

On top of that are requests for pay raises for state workers, teachers and university faculty, he said.

The State of Nevada Employees Association is asking for a 9 percent pay boost. Comeaux said he doubted there would be money available for that. He did not give any hint how much he might recommend to Gov. Miller for pay raises.

The five-member forum will meet again April 28 to make its final recommendations. The panel was created in 1993 by the Legislature to give an independent look at estimating state tax revenue.

In 1991, the Legislature, seeking more money for programs, increased its tax revenue predictions so the budget would be balanced and allow more money to be spent. The state then got caught in the recession and had to scale back programs and cut workers.