Modest increase forecast for state revenue

Nevada’s Economic Forum this week projected a modest overall increase in General Fund revenues for the coming biennium.

Total General Fund revenues, the panel said, should come to $11.4 billion for the 2024-25 budget cycle.

The forum is a five-member panel of business leaders and finance experts appointed to provide the governor and lawmakers with an independent look at state revenues. The panel was optimistic about this fiscal year and the 2025 fiscal year. But they were less so when projecting FY2024 revenues, predicting a slight decrease in collections in gaming and several other revenue streams. They predicted the Modified Business Tax collections would be harder hit in 2024, falling 12 percent.

Among the major revenue streams, they predicted a 7.3 percent increase in the sales and use tax this fiscal year, 6.6 percent to $1.9 billion in fiscal 2024 and 4.5 percent more in 2025 for just over $2 billion in the final year of the biennium.

But gaming percentage fee collections, the forum said would decrease from the actual $963.5 million in FY2022 to $936.8 million by the end of this fiscal year and $907.8 million in FY2024. But they said gaming collections would rebound to $935.8 million in FY2025.

When all the other fees and small revenue streams are added in, gaming revenues to the state topped $1 billion in fiscal 2022. But that total is expected to drop to $963.2 million this fiscal year and $941.5 million in FY2024 before growing somewhat in 2025 to $962.8 million.

Those projections are, again, after deductions for tax credits.

The three pieces of the Modified Business Tax — regular businesses, financial businesses and mining companies — are projected to total $803.8 million this fiscal year but drop by 12 percent in fiscal 2024 to $706.6 million in fiscal 2024. MBT revenues recover in fiscal 2025 to $742.2 million, according to the forum.

For the Insurance Premium Tax, long regarded as the most stable of the General Fund revenue streams because most of the collections are mandatory, total revenues are projected to increase this fiscal year as well as in both years of the coming biennium. Total revenues after tax credits are expected to generate $547.9 million this year, $581.2 million in 2024 and $616 million in 2025, increases of 5.8 percent, 6.1 percent and 6 percent respectively.

The commerce tax is projected to continue growing through the coming budget cycle, passing the $300 million mark this fiscal year and growing to $321.5 million in 2024 and $339.5 million in 2025.

Finally, the Real Estate Transfer Tax is projected to be stable this year and into the coming two fiscal years at about $120 million a year.

The forum projects revenues for the so-called seven major revenue streams — sales and gaming taxes, insurance tax, business tax, live entertainment tax, real estate transfer tax and commerce tax. They also sign off on the Technical Advisory Committee’s projections for more than 50 “minor” revenue streams.

Under state law, the forum’s revenue projections for the General Fund must be used by the governor and Legislature in building the upcoming state budget unless the governor and lawmakers vote to raise taxes in one or more categories.

The forum meets again in May as the Legislature prepares to adjourn to tweak their projections with updated monthly revenue data.