As expected, the governor and Legislature will have a lot less money to spend in the coming budget cycle than they did last go around.
The Economic Forum on Wednesday set total general fund revenues for fiscal 2012 and 2013 at $5.3 billion. That is nearly $700 million less than the $6 billion the 2009 Legislature had in projected revenue and some $400 million less than the revised projections prepared for the 26th special legislative session last January.
That total is also $3 billion less than the $8.3 billion that state agencies have requested for the coming biennium.
"I think we're being realistic with what we know is going on with the economy," Forum Chairman John Restrepo said. "We're just trying to reflect the new normal."
Member Mike Alastuey said the projections "take into account some very, very preliminary readings of a slow recovery."
Linda Rosenthal agreed, saying the decisions reflect member beliefs "there are some signs of improvement in the economy."
Member Matthew Maddox and the others said the forum was trying its best to give the governor and Legislature reasonable revenue projections but that nothing is certain in this economy.
"The only think that's going to be certain in the next two years is volatility," Maddox said.
The projections must, by statute, be based on existing law. That means they don't include any of the tax increases, local revenue sweeps and other revenue generators approved by the 2009 Legislature and 26th special session, which sunset at the end of this fiscal year.
One of the biggest hits there is the reduction of the modified business tax from 1.06 percent this year to the 0.63 percent level it was at before 2009. That sunset will cause a roughly 40 percent reduction in collections, dropping projected revenue from that source nearly $150 million to $224.8 million in 2012. The other major hit will come as the Local School Support Tax piece of sales taxes drops from 2.6 cents to its historic level of 2.25 cents.
With their first vote on the state's biggest revenue generator, the five forum members signaled their intent to be very restrained in their estimates, projecting that the sales tax will generate $1.62 billion over the biennium with only a 1.3 percent increase next year and 3.2 percent in fiscal 2013.
They projected the gaming tax and accompanying Gaming Live Entertainment Tax will produce another $1.69 billion, an increase of about 6.5 percent over the biennium.
Together, gaming and sales taxes generate nearly two-thirds of Nevada's general fund revenue.
About the most stable of the major state revenue streams is the insurance premium tax, primarily because insurance is required for every mortgage and every vehicle licensed in Nevada. That tax is expected to generate about $485 million over the biennium, just a few million less than it did before the recession.
In addition to the major revenue streams, the general fund is fed by about100 minor revenue streams ranging from mining fees and cigarette taxes to marriage license fees, corporate licensing and other fees collected by the secretary of state and liquor taxes - all of which are itemized in the forum projections finalized Wednesday.
The governor and lawmakers must use their projections in developing the budget. The governor and Legislature, however, can approve higher levels of spending if they provide the necessary tax increases to pay for it.
Governor-elect Brian Sandoval, however, has said he doesn't plan to extend the tax hikes, that he plans to allow them to sunset.
The Economic Forum is a five-member panel of financial experts from the private sector appointed by the governor and legislative leadership. The current members are Restrepo, Alastuey, Maddox, Rosenthal and Andrew Martin.
