NPRI comments on Economic Forum projections
LAS VEGAS — Responding to media reports that Nevada’s Economic Forum panel is projecting that the State of Nevada will collect $6.3 billion in tax revenue over the next two fiscal years, Victor Joecks, NPRI executive vice president, released the following comments:
Today’s Economic Forum revenue projections show why Nevada lawmakers do not need to consider tax increases during the 2015 Legislative Session.
The forecast of $6.3 billion in revenue for the next two-year budget cycle is the highest amount ever projected for Nevada. Combined with reversions of existing funds from agency accounts back to the general fund and other transfers, Nevada will be able to finance a spending plan comparable to its current $6.6 billion budget without raising taxes.
It’s important to compare the Economic Forum projection to Nevada’s historical levels of spending, not wish-lists from government bureaucrats.
The 2011 Legislature passed a budget of $6.2 billion, which included re-authorizing of supposedly “temporary” 2009 taxes the Sandoval administration had earlier pledged would sunset. Then, in 2013, lawmakers approved a general fund budget of $6.6 billion, which also included around $600 million in tax increases from the “sunset” taxes.
Joecks then pointed out the problems of comparing the $6.3 billion projection with the $7.7 billion in agency budget requests.
State agencies have again submitted spending wish lists — which normally allows them to cry that receiving less than they wished for is a dire “cut.” But receiving an increase smaller than you desired is not a cut. It’s just a smaller helping of “more” than you wanted.
The appropriate budget number with which to compare this $6.3 billion revenue projection is the $6.4 billion Economic Forum revenue projection from May 2013, which included around $600 million from the sunset tax increases.
State government need only tighten its belt by a tiny fraction — balancing its budget without raising taxes — to impress all the businesses across the country that are looking for fiscally prudent state leaders.
Rapidly rising costs for Medicaid and public-sector pensions are eating increasingly larger portions of the budget. That’s a phenomenon that will grow worse in the next few years unless lawmakers find a way to reverse the 2013 agreement with Gov. Sandoval to expand Medicaid eligibility rules and double the number of beneficiaries. Cost-effective ways of providing key services do exist, and it is incumbent on policymakers to seek them out. Responsible policymakers will actively challenge the institutional, knee-jerk momentum through which agencies seek to do what they’ve always done.
The new numbers from the Economic Forum also show the strength of Nevada’s revenue structure, said Joecks.
Nevada would benefit from genuine revenue-neutral tax reform — like the plan NPRI has proposed. But the forum’s numbers show that a tax increase couched as “meeting the needs of a changing Nevada” is entirely unnecessary.
In November 2012, Nevada’s Economic Forum projected the state would collect $5.8 billion in revenue. Two years later that number has soared by $500 million to $6.3 billion. Nevada already has a generally stable group of taxes, and lawmakers should avoid introducing more volatile tax instruments like a corporate income tax or fundamentally flawed taxes like margin or gross receipts taxes.
Joecks noted that NPRI recently published Solutions 2015, a sourcebook of information in over 50 policy areas, which includes dozens of specific ways to increase results while lowering spending.
- Study: Solutions 2015: A Sourcebook for Nevada Policymakers
- Study: 33 ways to improve Nevada education without spending more
- Study: Reforming Nevada's Public Employees Pension Plan
- Study: One Sound State, Once Again
Media inquiries should be directed to Kevin Dietrich, NPRI's Communications Director.