Sales Produce Lower-than-Expected Tax Revenues

A day after Nevada's governor proposed nearly $112 million in cuts in agency spending plans, a report showed Thursday that sales taxes - one of the state's biggest revenue sources - are continuing to slip below projections.

The report showed that merchants had $27.9 billion in sales in the first seven months of the current fiscal year - July through January - but the state's $582.6 million share of taxes based on the sales is $13.4 million below projections last year by the Nevada Economic Forum.

The state's share of sales taxes is up nearly 3 percent over the amount collected in the same period last fiscal year. But Senate Majority Leader Bill Raggio, R-Reno, commenting on Gov. Jim Gibbons' budget-cutting plan Wednesday, noted that the state had been seeing double-digit rather than single-digit gains.

The state Taxation Department report on the July-January sales also showed that in January statewide sales totaled $3.67 billion, up just under 1 percent.

A breakdown of the sales and for the fiscal year to date showed that seven Nevada counties had decreases, while the other 10 had increases. Those with decreases included Carson City, Churchill,
Douglas, Lander, Lyon, Mineral and Washoe.

Clark County, which includes Las Vegas, accounted for $2.76 billion of the January sales, up 1 percent over the same month a year before. Over the first seven months of the fiscal year, its sales total was $20.89 billion, up 2.4 percent.

Washoe County, which includes Reno, had $510.9 million in January sales, down 0.9 percent. So far this fiscal year, its sales total is $4.25 billion, down 0.4 percent.

Carson City was down 0.5 percent in January, while Churchill County was down 5.6 percent and Elko County was up 18.1 percent.

The combined taxes based on the January sales totaled $281.2 million and are split among the state, schools, cities and counties. The state's share is $74.3 million for January.

For the first seven months of the fiscal year, the state's portion is running $13.4 million, or 1.3 percent, below the estimate projected in November by the Economic Forum.

Gibbons' budget chief, Andrew Clinger, and state lawmakers' fiscal analysts relied on a preliminary version of the sales tax report in projecting that state sales and business tax revenues could be nearly $112 million under projections in the coming two fiscal years.

"We must live within our means to ensure a balanced budget," Gibbons stated in telling his various agency directors to cut that much from their proposed spending for the upcoming biennium.

Clinger said that agencies will outline cuts by early next week and lawmakers should have details by the end of the week. He also said the target amount represents nearly two-thirds of the cost of budget "enhancements" that the agencies had proposed earlier.

The cut directive went to all agencies, although K-12 education, child welfare and transportation construction budgets won't be affected.

The cuts represent less than 2 percent of the two-year, $6.8 billion budget submitted by Gibbons in January. The budget still will be nearly $1 billion higher than the current two-year budget.

Whether the proposed cuts remain in place will depend on revised revenue projections from the Economic Forum that won't be out until
May 1. That's about a month before the final version of the budget has to be approved by legislators.

Gibbons also has options that would ease the pressure for the cuts. That would include a change in his stance against any fee increases not supported by those who would be paying the fees. He also could consider dropping his efforts to reduce the business tax or a levy on bank branch offices.

Assembly Speaker Barbara Buckley, D-Las Vegas, said reductions
could be made in state prison budgets by speeding up releases of
qualifying inmates who aren't considered threats to society. Assembly Ways and Means Chairman Morse Arberry, D-Las Vegas, said some big increases proposed for higher education also could be chopped.

(Copyright 2007 by The Associated Press. All Rights Reserved.)