Merchants report nearly $2.1 billion in January sales

Brendan Riley

Thursday, March 18, 1999 | 9:19 a.m.

CARSON CITY - A good January for Nevada merchants - nearly $2.1 billion in sales - translated into a good month for state coffers as sales tax collections climbed by 10.5 percent.

The revenue report Wednesday from the state Taxation Department plus last week's encouraging casino win report indicate that a predicted shortfall of up to $140 million this fiscal year may be overstated by $40 million or more.

Combined, sales and gambling tax revenues account for two-thirds of the money needed to run state government.

The 10.5 percent sales tax increase was higher than strong gains in the October-December quarter, and brings the growth in the state's cut of sales taxes for the fiscal year to date to a healthy 8.9 percent.

The average is higher than the 6.9 percent growth projected for the entire fiscal year by the state Economic Forum. The forum's dismal forecast last fall prompted Gov. Kenny Guinn to call for numerous budget cuts.

The forum will meet again at the end of April to revise its predictions based on the latest data on collections of sales, casino and other taxes.

A breakdown of the latest sales report shows the Las Vegas area was up 10.6 percent during January and Reno area sales were up 3 percent.

Statewide, auto sales were up 9.3 percent; general merchandise sales were up 12.6 percent; clothing store sales were up 19.5 percent; and building supply sales were up 5.4 percent.

A tourism-related category, eating and drinking places, was up 13.7 percent statewide. A breakdown shows an 16.8 percent gain in the Las Vegas area and a 3.4 percent increase in the Reno area.

The state's share of sales taxes during January totaled $42.1 million, up 10.5 percent over January 1997.

There's no indication of bad revenue reports in coming months. More likely, they'll show gains due to the opening of new megaresorts in Las Vegas.

But Guinn chief of staff Pete Ernaut has said even though sales and casino taxes are coming in at stronger levels than expected, the gains are still not enough to make more than a modest upward change in the Economic Forum's gloomy November revenue estimate.

A 1-percent cost-of-living raise for state employees would cost more than $20 million, and that's Guinn's top priority if the tax revenue projections are raised, Ernaut said.

Senate Finance Chairman Bill Raggio, R-Reno, also has cautioned that those seeking more money shouldn't get their hopes up too high.

There are concerns about projected savings of about $14 million in the state prison system's budget, and about the cost of curing financial problems of the state employee health plan.