Members of the Legislative Interim Finance Committee were told on Wednesday with all the tax hikes and tax credit calculations, the state ended up with $7.34 billion in General Fund revenue to spend over the current two year budget cycle.
That total is actually a bit more than the $7.29 billion appropriated by the 2016-2017 budget passed by the Legislature.
Legislative Counsel Bureau Economist Russ Guindon said the Economic Forum, which had to base its May 1 projections on existing law — before the tax hike package was approved — projected a total of $6.31 billion to the General Fund.
That tax package, including the controversial “commerce tax,” revamped Live Entertainment Tax and elimination of the sunsets on tax increases approved two years ago, he said is projected to raise $1.19 billion more — a total of $7.5 billion.
But then, he said, you have to subtract the cost to the state of the tax credits given not only to Tesla but other companies moving their businesses to Nevada. That total, he said, is $156 million — just about $90 million of which goes to the electric car company.
The net is $7.34 billion in General Fund revenue but, while most people see that as the state budget, it’s actually just more than a third of the total $20.4 billion the state is going to spend in 2016-2017.
The commerce tax, is the most controversial part of the tax package. Critics charge it’s just a reworked version of the margins tax voters rejected last November. Expected to generate about $239.6 million over the biennium, it’s imposed on all businesses in the state with gross revenues exceeding $4 million a year with rates that vary according to the type of business.
Up to half that total can be deducted from what those businesses pay in the Modified Business Tax — basically a payroll tax — but neither Guindon or any other state expert knows how much will actually be offset that way.
The other unknown is the Live Entertainment Tax, which underwent several major changes in the 2015 session. Those changes, which included imposing the tax on outdoor festivals including Burning Man, were described as revenue neutral. But some think the amount will be higher than the projected $294.4 million in the coming two-year cycle.
The tax package also includes a dollar-per-pack increase in the cigarette tax to $1.80. That’s expected to generate more than $192 million over the biennium. In addition, the Passenger Carrier Tax created in legislation allowing companies such as Uber and Lyft to operate in Nevada is expected to generate $36.5 million.
Beyond the General Fund, the state budget includes $7.95 billion in federal funds — more than $6 billion of that in the health and Human Services entitlement programs.
There’s more than $930 million in Highway Fund money in this budget package and $3.75 billion in “other” money — fees, fines, licenses and other collections by agencies such as those in the Business and Industry Department.
Finally, there’s more than $500 million in the “Balance Forward” category — reserves and other cash in a long list of special purpose agencies. Upward of $150 million of that is in the Public Employee Benefits Program and another $110 million in the treasurer’s Bond Interest and Redemption fund. That fund is an emergency pool designed to ensure even if the economy tanks, the state can pay its bond debt for at least six months. Another sizeable pot of Balance Forward cash is the local money in the Intergovernmental Transfer account — money collected from local governments then used to leverage more federal money before most of the cash is transferred back to the locals for human services programs.