Economic Forum forecast adds $217M to general fund

By Sandra Chereb

Associated Press

Published: Monday, May 2 2011 10:06 p.m. MDT

Economic Forum Chairman John Restrepo speaks during a hearing Monday, May 2, 2011, at the Legislature in Carson City, Nev. The panel will make final revenue projections for the next two years.

Cathleen Allison, Associated Press

Enlarge photo»

CARSON CITY, Nev. — A panel of independent business leaders on Monday projected Nevada revenues for the upcoming two-year budget cycle at more than $5.5 billion, an addition of more than $217.7 million from the forecast it made back in the December.

The Economic Forum cited anemic but improving economic activities in making the revision. Under state law, the forum's projections must be used by the governor and the Legislature to build a budget.

Republican Gov. Brian Sandoval hailed the news Monday, saying a statement that the new forecast was "a strong signal that our economy is continuing on the road to recovery."

But Democratic leaders in the House and Senate said the governor's proposed budget would still require cuts to education, health services and other programs — even with the extra revenue.

During Monday's marathon meeting, the forum heard detailed reports on the state's labor market, unemployment, tourism and housing trends.

Panelists agreed they would pad earlier projections in sales, live entertainment, business and property taxes, but they downgraded the outlook for casino taxes. While statistics show tourists and conventions are returning to Las Vegas, the state's economic engine, casino revenues have been flat or declining over recent months.

"More people are coming, but unfortunately they are spending less," said Mike Lawton, senior analyst with the Gaming Control Board.

For the 2012-2013 biennium, the forum projected $1.34 billion in casino taxes, down $32.9 million from projections made in December. For the current fiscal year, casino revenues were reduced by nearly $11 million.

Forum members, however, added $96.4 million in sales tax revenues for the rest of this year and the next two years.

Monthly reports from the Nevada Department of Taxation show taxable sales have increased for eight straight months, suggesting consumers are beginning to loosen the hold on their wallets.

"We will see consumers making purchases they've put off for several years," said Janet Rogers, an analyst with the administration's budget office.

One forum member, Andrew Martin, urged a cautious approach.

"I don't really think we have the pent-up demand," for buying goods, he said, adding that with gasoline prices over $4 a gallon in some areas, gains in spending could quickly erode.

Dan White, an economist with Moody's Analytics, said housing would remain the biggest drag on the state's economy. Nevada leads the nation in foreclosures, where one in 14 homes is in some stage of foreclosure.

Nevada's unemployment rate reached double digits in February 2009 and has remained well above the national rate ever since. In December it hit a record 14.9 percent, but has since eased to 13.2 percent in March.

Economists, however, attribute most of the unemployment rate decline not on job creation, but on a shrinking work force as people leave the state or give up looking for work.

Bill Anderson, chief economist for the Nevada Department of Employment, Training and Rehabilitation, said Nevada's job numbers have remained flat.

Tens of thousands of high-paying construction jobs were lost during the recession, and Anderson said about half of predicted job growth will be in accommodation and food industries.

Associated Press writer Deb Weinstein contributed to this report.

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