Lawmakers can expect to get some more money to spend when the Economic Forum sets state revenues on Monday — but probably not as much as they’re hoping for.
They got some good news last week when the Technical Advisory Committee predicted Nevada’s “minor revenues” would increase $51.3 million over what was projected in November. The minors come from more than 70 sources and, together, are anything but minor, generating more than $500 million a year.
Monday, the focus of the five-member panel of financial experts will be projecting the “major” revenues that support the General Fund budget.
While she declined to say what fiscal staff has told her, “I’ve got my fingers and my toes crossed,” said Senate Finance Chairman Joyce Woodhouse, D-Las Vegas.
Sales taxes and gaming fees are by far the biggest and both are currently projected to grow 5 percent or more a year.
Most of the projections including gaming are expected to be optimistic. The sales tax is the problem. It’s currently projected to bring in $2.3 billion over the 2018-19 budget year.
But while taxable sales are running 6.6 percent ahead of 2016, actual collections are up just 2.4 percent.
In part, the gap is the result of a complex piece of the Tesla deal that created the Storey County Economic Diversification District to funnel state sales tax money back to Tesla.
In November, the forum projected a total of $7.89 billion, $541.3 million more than in 2015. Gov. Brian Sandoval’s recommended budget not only spent that money but more including $100 million in projected marijuana sales tax revenue.
Lawmakers, obviously, are hoping the forum adds significantly to that total, giving them cash to spend on their priorities. That won’t happen if the forum pulls back on the sales tax.
Altogether, lawmakers have already added as much as $40 million to what the governor recommended. About $10 million of that total happened Friday when lawmakers rejected most of Sandoval’s proposed reductions to mental health programs.
In addition to sales taxes and gaming fees, the “majors” include the Modified Business Tax, the gaming Live Entertainment Tax, Insurance Premium Tax, Real Property Transfer Tax, Governmental Services Tax and the controversial Commerce Tax.
The increase in the minor revenue streams is, in large part, the result of the Live Entertainment Tax on non-gaming activities. This cycle, for the first time, the non-gaming LET captured events such as Burning Man and Electric Daisy.
But some of that increase will likely be offset by a decrease in the gaming LET, the result of some of those events shifting to non-gaming venues.
November projections have gaming fees producing better than $1.5 billion over the coming biennium, the gaming LET $222 million, Insurance Premium Tax $788 million and the Modified Business Tax $1.2 million.
One bright spot for the forum is the commerce tax imposed on businesses who gross more than $4 million a year. That tax was originally expected to make the state about $120 million this biennium. It was so far ahead of that, the November forum projected $181 million for 2018 and $190 million for 2019. Those numbers could go up even more on Monday.
Whatever the forum decides, lawmakers have to either live with the total or find more revenue by either taking it out of some other part of the proposed budget or by passing a tax increase.