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October 25, 2014

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Casino tax payments lag behind projections

CARSON CITY -- No one is pushing the panic button yet, but state financial experts are keeping a close eye on the tax collections that are falling millions of dollars behind predictions.

The Gaming Control Board reported Tuesday that casinos have paid $187.6 million in taxes this fiscal year, up 1.8 percent from last year. But the Economic Forum, a group of lay experts, had predicted gaming tax receipts would jump 5.8 percent this year.

And sales tax collections, while up 5.2 percent this fiscal year, are also below the forecasted 8.5 percent increase.

"We're lagging behind a little bit and we're keeping a close eye on it," said state Budget Director Perry Comeaux. "But we're not down to the point where we're cutting back expenditures."

"There is plenty of time to recover," said Comeaux, referring to this fiscal year which ends June 30, 1998.

Ted Zuend, an economist for the Legislative Counsel Bureau, said sales tax receipts are not putting up the big increases of a year ago, but he expected a lull in collections.

"We're not concerned about a big shortfall at this point," he said.

Russell Guindon, senior research analyst for the state Gaming Control Board, said tax collections from casinos would have to average 10 percent the rest of this fiscal year to reach the predicted $546.1 million.

That's not likely since there hasn't been a month since December 1995 when the gaming tax came in at a 10-percent clip. Comeaux said, however, he expects the gaming tax receipts to rise in the coming months as the casinos collect on their IOU markers.

"There's construction down there (Southern Nevada) that will be a shot in the arm after the first of the year," he added.

Zuend said the win by gaming casinos is up 5.5 percent and he expects the tax receipts to match that eventually. But the way the taxes are collected, the receipts trail.

"It will come in line over time and the collections will be comparable," he said.

The sales tax receipts, he said should also increase as some of the big hotel and gaming companies in Las Vegas get ready to open new properties.

There's not as much sales tax collected when the projects get under way. But tax revenues increase as the resorts buy furniture, liquor and other equipment as they prepare to open.

The state's $3.1 billion two-year budget is built on the estimates of the Economic Forum, a group of five lay members who are specialists in finance.

The declining price of gold on the world markets could mean less tax revenues for Nevada this fiscal year. Since 1995, the state has been collecting less and less mining tax revenue.

Mining contributed $15.1 million to the state coffers last year but the forum predicts a 4.1 percent drop in revenues this year.

On the brighter side, the business tax is coming in at a slightly faster pace than predicted. For the first three months of the year, the receipts totalled $17.2 million, up 6.8 percent compared to the 6 percent forecast.

If belt tightening is needed, the reductions, if any, should not be as painful as in 1991. Gov. Bob Miller sliced the budget by $173 million and laid off 266 state workers as Nevada's tax revenues tumbled far below estimates.

After that Miller suggested and the Legislature agreed to set up a reserve fund to meet emergencies. That "rainy day fund" now stands at nearly $130 million.

David Morgan, chairman of the economic forum, says he doesn't see any cause for alarm at this point. The forum, he said took a middle of the road approach in predicting revenues.

"It was neither conservative or liberal," he said.

Morgan, a certified public accountant in Reno, hasn't seen the tax collection reports. But he said the work of his group "is a projection, not a guarantee" that revenues will be coming in at that amount.

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