Economy expected to slow but be brisk

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

CARSON CITY -- Nevada's economy will slow slightly in the next two years but will still be brisk, according to financial experts.

Economists from various state agencies predicted Tuesday that barring a national recession, the growth in Nevada will continue at a 6-8 percent clip.

During a four-hour meeting, they presented a bundle of statistics to the Economic Forum, a group of five lay persons who will decide how much tax revenue the state will have available to spend in 1997-99 fiscal years.

Forum Chairman David Morgan said the figures suggest there will be a "strong economy" in the future. The members now have to decide the question of "how long can we sustain it."

"The figures show we have a strong and stable economy, but we will not grow at the same rate as in the past," Morgan said. "All good things come to an end."

Russell Guindon, senior research analyst for the State Gaming Control Board, said that between now and July 1999 there should be 25,000 to 26,000 new hotel rooms, most of them in Las Vegas. That will mean an additional 25,000 slot machines and nearly 1,000 more games.

"We believe Las Vegas will be able to fill the rooms and bring visitors in," Guindon said. "This is a robust assumption." But he also suggested that the win per slot machine and table game will be dropping with the onslaught of the additional games.

Economist Ted Zuend of the Legislative Counsel Bureau said the opening of new casinos, which include Bellagio and the addition to Caesars Palace, will "strengthen gaming which has been pretty weak."

Zuend predicted the two resorts would draw more high-rollers to Las Vegas and not "cannibalize" each other. "The intent is to get the rich folks to come more often," he said.

Gaming revenues for this fiscal year are increasing at about 3 percent. The Control Board predicts a growth of 7 percent next fiscal year and 6.5 percent the following year.

State Budget Director Perry Comeaux is forecasting a 7.7 percent increase in gaming revenues next year and 6 percent the following year. Fiscal analysts of the counsel bureau foresee a 6.5 percent increase next year and 7 percent the following year.

On sales tax, the legislative experts foresee a 7.5 percent increase in tax collections next year and 7 percent the following year. Comeaux's office predicts a 7.8 percent and an 8.2 percent increase in the next two years, and the state Taxation Department foresees an 8 percent increase in sales tax receipts.

All the experts don't see the double-digit increases in the sales tax continuing. Zuend said auto sales have been rising at a 26 percent rate but that's "not sustainable."

Zuend foresees a "marked shift in consumer preference" from gas-saving cars and trucks to sports utilities, full-sized trucks and Acura-type vehicles. Because this switch cannot continue indefinitely, sales by auto dealers should settle into a more normal growth pattern of about 10 percent per year."

Car sales account for about 10 percent of the total sales tax collections.

In forecasting the total state tax revenue for the next two fiscal years, Comeaux is high at $3.02 billion followed by the Tax Commission and Control Board at $3.0 billion and the Legislative Counsel Bureau at $2.91 billion.

The forum will meet Nov. 25 to make its projections to allow Gov. Bob Miller to build his budget. Both the governor and the Legislature must follow these estimates in fashioning a spending program.