State tax revenue $141 mil. more than expected

Wednesday, Aug. 25, 2004 | 11:12 a.m.

CARSON CITY -- Robust retail and real estate sales as well as a big jump in the amount of money casinos won gave the state $141 million more in tax revenue than projected for 2004, the legislative Taxation Committee was told Tuesday.

Russell Guindon, deputy fiscal analyst for the Legislative Counsel Bureau, told the legislative Taxation Committee Tuesday that $60 million more than expected was received from the sales and use tax, $41.1 million extra came in from gaming, and the real estate transfer tax brought in $36.6 million more than expected.

A variety of other taxes also saw bigger than projected revenue, pushing up the state's total tax collection.

The Legislature predicted it would have a balance of $133 million at the end of the fiscal year, but the balance wound up being more than $274 million.

Senate Majority Leader Bill Raggio, R-Reno, said $50 million of the windfall will go into the "rainy day" fund to pay for unexpected emergencies. He said $130 million in the fund was depleted by the 2003 Legislature and "that gave us severe concerns."

Raggio noted the real property transfer tax "performed better than expected." It produced $88 million last fiscal year; $51.4 million had been predicted. Guindon said the staff predicted "too low on growth and appreciation in home prices. We missed the inflationary (effect) and the number of transactions."

The median prices of homes in Southern and Northern Nevada have risen dramatically, and the tax revenue increases with increases in home sales prices.

Sen. Mike McGinness, R-Fallon, chairman of the committee, said if the interest rates go up, the housing market could change dramatically.

The tax predictions also were off for the revenue from the live entertainment tax and the business license fee -- those predictions fell short. The fiscal analysts at the 2003 Legislature predicted the casino entertainment tax would yield $117.5 million last fiscal year but it fell $28.3 million or 24.1 percent below the estimate.

The entertainment tax was extended from the casinos to entertainment in nongaming businesses by the last Legislature. Guindon said the staff did not have any experience in estimating how much this might bring in. He said a survey of amusement spending was used in making the prediction, and that guess proved too high.

And he said that businesses with less than 300 seats were exempted from the tax and that was not calculated precisely either.

There was also a shortfall in the expected collections from the business license fee. It had been estimated that $22.7 million would be realized but the state only received $10.3 million.

Chuck Chinnock, executive director of the state Department of Taxation, said it had estimated there would be 150,000 businesses that would each pay the $100 annual tax. But he said the department is probably missing 300,000 people or businesses that should pay the annual fee.