Nevada's Proposed 2003-2005 Budget:

Review & Analysis

By Robert Schmidt, Ph.D., Charles F. Barr
  • Saturday, March 1, 2003

Executive Summary

As the Nevada legislature deliberates critical fiscal issues impacting the State, it is faced with the daunting task of evaluating the proposed budget.

This report questions many of the outcomes of the proposed budget. This critical analysis is not an attempt to suggest expert knowledge of each individual budgetary item, but rather to suggest that many of the assumptions underlying the budget are inconsistent with both empirical and theoretical evidence.

We find that many of the revenue projections in the proposed budget are not transparent, do not follow any recognized methodology, and are inconsistent with Federal data and other empirical information. For example, our analysis suggests that current calls for significant increases in State tax revenue are based upon overestimates of expected growth in areas such as school enrollment, Medicaid caseloads, and other welfare spending such as Temporary Assistance for Needy Families (TANF).

By closely analyzing the assumptions made by Governor Guinn and the Task Force in arriving at their estimates of State revenue needs, as well as historical patterns of government expenditure growth in Nevada, our analysis suggests that State services can be funded at current levels without the proposed massive increases in taxes. In fact, we demonstrate that the proposed increases in cigarette and liquor taxes, without any other tax increases, will generate sufficient additional revenues to create a surplus rather than a deficit.

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