Budget Panel Starts Revenue-Estimating Process

Wednesday, Oct. 23, 1996 | 11:59 a.m.

After hearing from several fiscal experts, forum members said Tuesday they figure sales taxes will go up 9.5 percent this fiscal year while casino taxes will go up 3.2 percent. Those levies are the state's two biggest revenue sources.

But Economic Forum members left their long-range revenue estimating - for the coming two fiscal years - until a Nov. 25 meeting. That will be just in time for final work on Miller's budget plan that must go to lawmakers in January.

The estimates by the panel, headed by Reno certified public accountant David Morgan, must be followed by the governor and by the Legislature in developing a budget to carry the state through to the 1999 session.

The forum was created in efforts to ensure politics don't get too intertwined with the budgeting process - at least in the revenue assumptions that determine how much taxpayer money there is to spend.

Forum members got sheet after sheet of revenue estimates from fiscal experts representing the legislative and executive branches of government as well as outside experts.

The reports included one from state Demographer Dean Judson on "high and low scenarios" - continuation of Nevada's strong economy or the possibility of an economic tailspin of the sort that hit the state several years ago.

The "low" scenarios included a drop-off in tourism due to competition from other tourist areas, a slowdown in mining because of increased environmental controls, or general economic problems at the national level, Judson said.

On the high side, Judson said "baby boomers" drawn to Nevada casinos or other attractions are getting into their "high disposable income" years - and their children are grown and gone.

Other speakers included University of Nevada, Reno economist Tom Cargill who said the economy seems strong but there are some signs of weakening. He warned against getting locked into heavy, long-term spending because "what goes up must come down."

Ted Zuend of the Legislative Counsel Bureau said no economic slowdown is predicted in the foreseeable future. But he also warned against a "What, me worry?" optimism.

Russ Guindon of the state Gaming Control Board also said no recession is seen through 1999. He added that major casino expansion is continuing, with about 26,000 more hotel rooms expected by then in the Las Vegas area alone.

Nevada Budget Director Perry Comeaux said the estimates Tuesday on this year's gambling and sales taxes will enable him to complete work on "one-shot" appropriations that can be made from a huge surplus expected at the close of the fiscal year next June.

With that part of the Miller budget out of the way, except for any updating deemed necessary at the Nov. 25 forum meeting, Comeaux can then focus on spending by various state agencies in the coming budget cycle that opens next July.

While optimistic about a big budget surplus from this budget cycle, Comeaux is slashing spending proposals submitted by many of the agencies because they go beyond even the most optimistic revenue projections.

The budget proposal that will be sent by Miller to the Legislature probably will be in the $3 billion range - and the state Department of Education alone wants $1.6 billion. The University and Community College System of Nevada is asking for about $707 million - a 37 percent increase.

But judging from the revenue totals for the fiscal year that ended last June, there's reason for optimism. Preliminary reports show a 7.1 percent increase over the prior year in total general fund revenues - and the prior year was up 12 percent.

Last year's revenues were so strong that the state should now have $250 million or more in surplus and "rainy day" funds - meaning that for every $5 in funds spent last fiscal year, the state should have had $1 left.

The surplus amounts to 19 percent of the more than $1.2 billion in state general fund money spent last fiscal year, more than three times higher than the nationwide average of 5.8 percent, according to the National Conference of State Legislatures.

Comeaux also has said the surplus should continue to grow throughout this fiscal year - by as much as an additional $100 million. That would mean plenty of money for basic budgets plus new state construction and special projects - and no new taxes.

With the "rainy day" fund increased a bit and an additional reserve against economic hard times in place, about $160 million could be left over for the 1997 Legislature to spend on new construction or special projects such as computer gear for schools.