Experts say Nevada economy building steam

Thursday, Oct. 31, 2002 | 11:30 a.m.

CARSON CITY -- Nevada's economy is starting to rebound and the recovery will speed up over the next two years, according to the state's fiscal experts.

The Economic Forum, a group of five citizens, met Wednesday to make preliminary estimates of how much the state will collect in taxes during the remainder of this fiscal year and in the following two fiscal years.

"As we come out of the recession, the economy will start to accelerate," said Leo Seevers, a member of the forum from Reno.

The group will meet Dec. 2 to make its final predictions on which Gov. Kenny Guinn must build his 2003-2005 budget to be presented to the 2003 Legislature.

Then the group will meet in May as the Legislature nears the end of its session to make a more definitive prediction on the expected tax collections, giving lawmakers a chance to make final changes in the budgets.

Cary Fisher, chairman of the forum, said he expected to see a resolution of the Middle East issue by the May meeting. Fisher, of Las Vegas, said the members will have better data to work with then.

In May 2001, the forum predicted the state would collect $1.9 billion in tax revenue during the fiscal year that ends June 30. But Wednesday, it revised its estimate down to $1.82 billion, or a shortfall of $93.6 million.

The forum predicted a 4.5 percent increase in revenues next fiscal year to $1.888 billion and a jump of 5.3 percent in fiscal 2005 to $1.988 billion.

Guinn has already taken steps to cut the budget for this fiscal year. Predicted increases in the next biennium are not expected to cover all the expenses, especially those prompted by growth in school enrollment and social programs.

Guinn has already said there will have to be increased taxes.

Receipts from the gaming and sales tax make up more than 70 percent of the state's tax revenue. The gaming tax came in $41.8 million lower than expected and the sales tax came in $33.1 million less than forecast.

The forum, in its preliminary estimates, predicted the casino tax would grow 3 percent next fiscal year and 4 percent in fiscal 2005 when Steve Wynn's La Reve is expected to open on the Strip.

The forum forecast that sales tax collections will increase 5.1 percent next fiscal year and 5.6 percent in 2005.

Bill Anderson, an economist for the state Budget Office, told the forum that sales of new cars has helped bolster the sales tax collections last year. He and Lynne Knack of the state Department of Taxation predicted there would be a slowdown in sale of new cars in the coming two years.

Anderson said he expected that as tourists come back, business in bars and restaurants will increase to offset the loss of the car sales revenue.

"The economy is not going to just meander," Anderson said.

Frank Streshley, senior research analyst for the state Gaming Control Board, said gaming is making a comeback, especially with high-end gamblers.

"We are gradually seeing recovery in this area, mostly in Clark County and mostly on the Las Vegas Strip," Streshley said.

One major factor in forecasting a 4 percent increase in gaming taxes in 2005 is the planned opening of the La Reve in April 2005. But Fisher expressed concern the opening might be delayed and that would cut into the expected revenues for 2005.

Fisher said the opening of the Bellagio, built by Wynn, was two months behind schedule.

Noting a national trend in decreasing cigarette consumption, the forum estimated there would be no increases in tax collections in each of the next two years.

One bright spot was the insurance premium tax. Deborah Pierce, a forum member from Las Vegas, said insurance premiums are rising.

"Companies are taking out terrorism insurance and other policies that were not taken out before," she said.

The forum predicted revenue from the insurance premium tax would rise 7 percent in each of the next two years. It predicted tax collections from the business license tax would increase by 3.1 percent next year and 3.3 percent the following year. Receipts from the casino entertainment tax would grow 5.5 percent next year and 6 percent the following year, under the preliminary estimates approved by the forum.

Other members of the forum are Michael Small of Las Vegas and Ron Zideck of Reno.

Sun reporter

Ed Koch contributed to this story.

archive