Las Vegas Sun

March 28, 2024

State shortfall grim and grimmer

CARSON CITY - The state is expected to receive tens of millions of dollars less in taxes and fees than predicted over the next two years, leaving legislators and Gibbons administration officials facing the politically unpalatable prospect of budget cuts.

The non partisan Economic Forum meets Tuesday to forecast the future major tax revenues for the state over the next two years. Already fiscal experts are predicting that collections from sales and gaming taxes - Nevada's two major taxes - are going to be considerably lower than expected.

State officials Thursday got a glimpse of the gloomy news expected next week when an advisory committee to the forum predicted that tax collections from minor tax sources such as the liquor tax and marriage, divorce and commercial filing fees are expected to be $21 million lower than predicted in November.

Those minor taxes produce about $776 million, roughly 11 percent of the $7 billion two-year budget submitted by Gov. Jim Gibbons, based on November's revenue forecasts.

"We will be in worse shape than we are now," state Budget Director Andrew Clinger said after the advisory committee meeting.

Assemblyman Morse Arberry, chairman of the Ways and Means Committee, the panel that puts together the state budget, painted an even bleaker picture.

"We're going to be in the toilet," said Arberry, D-Las Vegas.

It already has been predicted that sales tax collections for school districts will be $109 million lower over the next two years than originally expected. By law, the state must make up that shortfall.

Dennis Neilander, chairman of the state Gaming Control Board, told the Senate Finance Committee this week that there has been a slowdown in slot machine play, a trend expected to result in $3 million less in gaming taxes annually than originally forecast.

The Senate Finance Committee and the Assembly Ways and Means Committee already are looking at ways to cut Gibbons' budget.

The Economic Forum will make predictions on the receipts the state can expect over the next two years from sales, gaming, insurance, cigarette, modified business and property transfer taxes.

In assessing the state's financial picture, Arberry said, "It's worse th an people think it is."

"Nevada has always been able to sustain and to overcome any recession or any downturn," he said. "But I knew that once we started having problems with the real estate market, that was the only thing keeping us afloat ... There's no money in the economy."

In revising the fiscal estimates dealing with the minor tax sources, the advisory committee reported that mining taxes are expected to be $3 million less than predicted during the next two years. Commercial recordings in the secretary of state's office will yield $13 million less than forecast in November, business license fees will decline $11 million, marriage licenses will be off $100,000 and liquor tax collections will be down $700,000, the panel said. And fees collected by the Nevada Supreme Court will be off $1 million from the original projection.

Even though interest on the state's collections will be $11 million higher than predicted during the coming two years, the overall take from the roughly 40 accounts included in Nevada's minor tax sources will be $21 million less than forecast.

The state Tax Department provided further bad economic news in a report this week showing reductions among major sales tax categories. Taxable sales on building materials for the first eight months of this fiscal year are down 19.3 percent, furniture sales are off 57.7 percent and car sales are down by 3.8 percent compared with the same period in fiscal 2006.

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