CARSON CITY, Nevada — A panel of experts said Nevada will probably bring in $6.2 billion in tax revenue over the next two years, a number that's slightly below the prediction made in December because the group is now accounting for about $156 million in tax credits that businesses might claim.
The five members of the Economic Forum said Nevada's tax structure this year has been a bit more successful in collecting revenue than they initially predicted, and that could help the state budget to the tune of $11 million. But those gains are canceled out when incentives including tax credits for the Tesla electric car company and film producers are factored in.
Lawmakers are expected to kick budget discussions into high gear now that they have received updated numbers on the state's revenues.
"This is the baseline for everything that we need to work up from," said Republican Assembly Majority Leader Paul Anderson, who's playing a major role in deciding how the state might raise taxes. "It's critical in the process."
The Economic Forum met in December and predicted that the state's tax system would bring in $6.3 billion from mid-2015 to mid-2017. That's below the $6.7 billion budget Nevada's using in the current biennium and below the $7.3 billion Gov. Brian Sandoval wants to spend in the next two years.
Panelists considered everything from gas prices to a rough winter on the East Coast to tourists' gambling habits as they developed tax revenue forecasts. Gaming Control Board officials told of lagging revenue from baccarat, a high-roller game dependent on about 200 wealthy players mostly from Asia. Baccarat play — and the state tax collections from it — have slowed because of an economic downturn in China and an aggressive crackdown on financial crimes by the U.S. Treasury.
They also heard from state labor market analysts, who predicted Nevada will have 140,000 more jobs at the end of the year than it did in 2010. They projected unemployment would fall to 5.2 percent in 2017, down from 7.1 percent now.
Those improvements are helping boost projections for sales taxes.
"Barring anything unforeseen, we think the groundwork has been laid to see continued improvement in the state's labor market," said Bill Anderson, an economist with the Nevada Department of Employment, Training and Rehabilitation.
Las Vegas' evolving entertainment landscape is also playing a role in the forecast. State analysts say people are watching fewer shows and doing more shopping and clubbing, which reduces revenue from the Live Entertainment Tax.
Sandoval, who said Nevada's tax system is outdated, has proposed extending temporary taxes that are set to expire soon and restructuring other ones such as the business license fee to raise an extra $1.1 billion during the next two years. He wants to use the additional money to invest in special programs for English language learners, students in poverty and children struggling to read.
"Our current revenue structure is not capable of fulfilling the demands of our growing population and not adequate to achieve the priorities and principles of the New Nevada," he said Friday.
While the Senate passed a Sandoval-sponsored bill in April that changes the business license fee and is projected to bring in $437 million over two years, the Assembly is charged with hammering out a final tax plan. Leaders in the lower house have proposed a different method for raising taxes. But they placed those discussions on hold until the Economic Forum released updated revenue projections.
The Assembly is also trying to determine which programs in Sandoval's proposed budget they want to keep.
"We have to define what that target is," said Republican Assemblyman Derek Armstrong, who chairs the Assembly Taxation Committee. "The Assembly is not going to put a revenue plan forward until we know what we're going to pay for."