Sagging revenue could hinder Guinn’s budget

Saturday, Jan. 20, 2001 | 9:45 a.m.

Nevada's economy has softened in the past few months, with collections from sales and casino taxes lagging behind predictions. The two tax sources produce three-quarters of the state's general fund revenue.

And energy costs are expected to rise, adding to the costs of maintaining prisons, mental health centers and the University and Community College System of Nevada.

The December predictions of the Economic Forum, a panel that sets estimates of state revenue that are used to build the budget, are proving too rosy.

"Gaming seems to be a problem," Legislative Deputy Fiscal Analyst Ted Zuend said, noting that the forum predicted the casino tax collections would show a 5.9 percent increase this fiscal year. So far, the tax receipts are up only 0.5 percent.

To reach the estimate, Zuend said the tax collections will have to average 11 percent to 12 percent for the final six months of this fiscal year.

Sales tax revenues in the first five months of this fiscal year have increased by 4.8 percent over the last fiscal year. The forum estimated the gain this year would be 5.8 percent.

Budget experts are waiting for the sales tax figures from December to see whether Christmas shopping helped push the revenues back up to the predicted levels.

Zuend also said nobody is certain about the national economy and whether it will rebound from its recent softening. In addition, the energy problems in California could cause a downturn in that state, which supplies many of Nevada's visitors.

The Economic Forum returns April 30 to update its predictions, which will be used to finish legislative work on the budget.

By that time, there will be three more months of tax collections to allow a clearer picture of state revenues. If they're down, the forum will probably lower its estimates, and the governor and Legislature will have to trim spending plans.

Two years ago, the forum raised its tax collection estimates, allowing the governor and the lawmakers to add money to the budget. Those who benefited included state employees, who got a 2 percent cost-of-living raise effective last July.

This fiscal year, which ends June 30, is the base period that the Economic Forum uses to make its predictions for the upcoming biennium. If the tax collections are lower this year, it could affect state spending for the next two years.