Nevada economy expected to cool slightly

Thursday, Sept. 30, 2004 | 10:48 a.m.

CARSON CITY -- Nevada's fast growing economy is expected to cool slightly in the coming two fiscal years, a state budget expert predicted Wednesday.

William D. Anderson, an economist for the state Budget and Planning Division, said it will be difficult to match recent double-digit increases in such things as sales tax collections during the first part of this year.

Nevada will continue to grow, he said, but, "We're through the boom period."

Anderson made his statements to the first meeting of the state's Economic Forum, a group of five people who will make predictions on Dec. 1 about how much tax revenue the state will receive in the next two fiscal years.

Gov. Kenny Guinn must then build his balanced budget based on the forecasts.

The meeting Wednesday was a preliminary session to review how the economy performed in the past two years and the forum will meet again Nov. 2 to make some preliminary predictions.

Sales tax collections grew 14 percent in fiscal year 2004 and Anderson said it would be difficult to match that performance in the 2006 and 2007 fiscal years. "In the absence of a significant round of multiple expansion projections (with the exception of Wynn Las Vegas) expected to be under way, it is questionable as to whether we can grow appreciably off of these strong results of late."

He's predicting "a noticeable easing in growth" beginning in the second half of this fiscal year, 2005. Sales tax collections, which account for about 32 percent of the state's revenue, should be in the 4-6 percent range in the coming biennium.

Anderson said he bases his preliminary predictions on the forecast of job growth in Nevada. But Michael Small, chairman of the Economic Forum, questioned this strategy. He said job growth in 2004 was 4 percent but sales tax collections were up nearly 14 percent.

Economic Forum member Deborah Pierce also expressed doubts. She said many people are spending more in the shops in Las Vegas. The city has "become more of an international shopping place," she said. And there will be new shops with the opening of the Wynn Las Vegas hotel and casino.

Anderson said that when there are more visitors there have to be more jobs.

Anderson predicted the visitor volume next fiscal year should increase with the completion of Wynn Las Vegas "before easing back to around 3 percent in the final year of the biennium.

"Preliminary forecast results suggest that we are looking at underlying growth in percentage fee collections from taxable gaming revenue of 4-4.5 percent."

The gaming tax produces more than 29 percent of the state's general fund revenue and is expected to produce $719.5 million this fiscal year.

Anderson expects the state to collect $217 million this year from the business tax and that should grow 7 percent per year.

About 14 million packs of cigarettes are sold in Nevada each month and the state collects 70 cents on each pack. Anderson said he expects the $118 million per year collected from this tax to continue unchanged at that level for the next two fiscal years.