Nevada faces shortfall

Monday, March 12, 2001 | 11:27 a.m.

CARSON CITY -- A financial report released today shows that major state revenues of sales and gaming tax collections are lagging and that the Legislature might have to make some big budget cuts.

Legislative Fiscal Analyst Gary Ghiggeri told the Senate Finance Committee the shortfall in the gaming tax receipts this year alone could mean reductions of $22 million to $33 million.

So far this fiscal year receipts from the gaming tax is down 2.3 percent, compared with the previous fiscal year. But the Economic Forum predicted collections would be up 5.9 percent. And sales tax revenue is coming in at 5 percent, which is below the expected 5.9 percent.

"This is bad news," Senate Majority Leader Bill Raggio, R-Reno, said. "I'm not optimistic we will have the revenues predicted by the Economic Forum."

Gaming and sales taxes constitute 73 percent of the proposed $3.4 billion general fund budget submitted by Gov. Kenny Guinn. The governor has said he is preparing a contingency plan to cut programs if revenues don't reach expectations. Those with the lowest priority would be cut first, although he has not identified what these might be.

Ghiggeri said if the gaming tax collections show no increase this fiscal year there will be a $33 million shortfall in predicted revenues. If it produces a 1 percent increase, there will be $27 million less than anticipated; a 2 percent increase would mean $22 million lower than predicted.

The budget must be based on predictions made by the Economic Forum, a group of lay financial experts. They meet again May 1 to update the latest estimates.

If revenues are lower than expected this year forecasts for the coming two years are also expected to be reduced.

Although winnings by casinos are up 3.5 percent for the first seven months of the year, Ghiggeri said money collected from credit play is down. And some casinos paid higher taxes than were required, and adjustments were made to the state's revenues.

Guinn's spokesman Jack Finn said the "governor feels we should not panic until we see the May 1 figures of the Economic Forum."

"He (Guinn) built his budget on priorities and will cut from the bottom up to make sure he keeps his top priorities," Finn said. While the projections are some revenues may be short, Finn said there are other areas that might yield additional funds.

For instance, he said, enrollments in the University and Community College System may be lower than expected. That could produce an extra $16 million to $18 million in savings to offset any shortfall in tax revenue, Finn said.

The Clark County School District has the bad luck to appear first before the committee after the report of declining revenues.

The district is pushing a bill for $9.2 million to start a pilot program to use block scheduling, which allows students to take eight courses a semester, in class periods of 85 minutes every other day. Leonard Paul, assistant superintendent of public instruction, said this change would allow a student to earn 32 credits over four years.

The state requires 22 1/2 credits for students to graduate from high school. The school district's current schedule offers only 24 credits. Consequently, a student who fails one or two classes has trouble making up the credits, Paul said.

About 12,000 students in the Clark County School District last year were credit deficient, he said.

The bill, Senate Bill 67, would start pilot programs at six high schools in the first year and six middle schools in the second.