Taxable sales fall 6 percent

CARSON CITY -- More evidence of Nevada's economic decline came Wednesday as the Department of Taxation reported sales of taxable products by businesses in the Silver State plunged by 6 percent in June.

That rate of decline is the worst since the state first began reporting that tax revenues were falling below projections in April 2007.

In the past 15 months, sales of taxable good by businesses have declined every month but two in comparison with the same month in the previous year.

Nevada businesses reported sales of $4.2 billion in June, down from $4.5 billion in June 2007. Thirteen of the state's 17 counties reported declines.

The department also reported that fiscal 2008 sales totaled $48.2 billion, a decline of 2.5 percent compared with the prior year.

The 2008 sales generated $3.9 billion in sales taxes statewide, down 3.7 percent from the previous fiscal year, the agency reported.

The state's 2 percent share of the sales taxes totaled $966.6 million -- a 3.4 percent decrease from the year before.

The rest of the tax revenue was divided among school districts, county and local governments. While down, the state's cut was $1.9 million higher than an Economic Forum projection made in June.

For June, Clark County businesses sold products valued at $3.13 billion, down 3.3 percent from the $3.24 billion in sales in June 2007.

Washoe County sales were $585 million, down 13.7 percent from the $678 million in sales a year earlier.

Nonetheless, sales to specialty trade contractors increased in June by 35 percent, while clothing store sales were up 4 percent and nondurable good wholesale sales climbed 8.1 percent.

But motor vehicles sales were down 16.1 percent and home furnishing sales dropped 23.8 percent.

Gov. Jim Gibbons, however, found reason for optimism.

"The construction industry remains strong with major projects in Southern Nevada, while consumer spending faltered in the month of June," Gibbons said in a statement. "Our state's more recent economic trends are anticipated given the state of the national economy."

Mary Lau, president of the Retail Association of Nevada, said she was not surprised by the drop because June was the time when gasoline prices were skyrocketing and people were avoiding driving and shopping as much as possible.

"It was a very bad time," she said. "Things were really slowing down. I think some increases will come (when August sales are computed). But people still are guarded in their spending. They are shopping cautiously and switching to discount stores."

Besides the June sales tax report, the state also issued a report Wednesday that shows that state revenues from major tax sources in the fiscal year ending June 30 were down 4.1 percent, or $115 million, from collections in the previous fiscal year.

Tax revenue for the year was $2.714 billion, down from $2.829 billion.

It marks the first time in at least 30 years that annual tax collections have dropped in Nevada.

For example, gaming tax revenue was $772 million, a drop of 5.9 percent, or $48 million; sales tax revenue was $966 million, a decline of 3.4 percent, or $34 million.

But the declining economy affected state government even more since the state expected tax revenue to increase by $183 million, or 6.5 percent, not drop by $115 million during the 2008 fiscal year.

As the result of the downtown, Gibbons and legislators since January have approved nearly $1.2 billion in spending reductions in the two-year budget that ends June 30, 2009.

Despite the declines, Gibbons' communications director, Ben Kieckhefer, said there is not an imminent need for another special legislative session to deal with additional cuts.

Legislators met in a June 27 one-day session to approve $275 million in reductions. They will convene in their regular 120-day session Feb. 2.

For the fiscal year that ended June 30, Nevada business sales were $48.2 billion, down 2.5 percent from the $49.4 billion in sales during the previous fiscal year.

Clark County sales were $35.9 billion, down just 0.9 percent from the previous year. Washoe County sales were $6.8 billion down 5.3 percent. Only Humboldt, Lincoln, Lyon, Mineral and White Pine counties reported increases.

Contact Sean Whaley at swhaley@review or 775-687-3900.

Contact reporter Ed Vogel at evogel or 775-687-3901.

The Associated Press contributed to this report.

Fiscal years 2007, 2008

Revenue20072008Pct. change
Sales tax$1,000,216,534 $966,099,141-3.4%
Gaming tax820,050,893771,847,078 -5.9
Modified business tax278,952,602284,603,0212.0
Insurance premium tax259,274,818256,693,189-1.0
Live entertainment tax-gaming portion121,655,196121,618,4720.0
Real property transfer tax120,374,96185,882,800-28.7
Cigarette tax113,071,937110,475,332-2.3
Commercial recordings76,969,14377,193,9760.3
Liquor tax38,911,09440,005,3372.8
Total major revenues$2,829,477,178$2,714,418,346-4.1

SOURCES: State controller’s office, various state agencies