February sales increase disappointing for Nevada

      CARSON CITY -- Businesses increased their sales by 4.8 percent in February, a healthy increase elsewhere but the worst single-month performance in Nevada in more than two years.
      The Department of Taxation's announcement of the plunge from typical double-digit increases comes just days before the Monday meeting of the Economic Forum. This group of private business leaders by law must decide how much the state government has to spend over the next two years. Sales taxes make up 37 percent of the state's annual $1.5 billion in revenue.
      "You can't say one month is a trend," Taxation Director Michael Pitlock said. "But clearly the economy is slowing down."
      In three of the last four months, business sales have showed monthly increases of less than 10 percent. But since the beginning of the fiscal year last July, business sales still are $15.9 billion, up 10.7 percent from the same period in the previous year.
      Pitlock blamed the February decline partly on the lack of motor vehicle sales. In recent months, car sales have been increasing at more than 20 percent each month. In February, the increase was only 5 percent.
      Nevada businesses sold goods with a taxable value of $1.8 billion in February, up 4.8 percent, or $80 million more than their $1.72 billion in sales in February 1996.
      In Clark County, businesses sold goods worth $1.24 billion, up 6 percent, or $70 million, from their $1.17 billion in sales in February 1996.
      The percentage increases are the lowest since January 1995.
      State Budget Director Perry Comeaux said the February decline is not an indication of a coming decline.
      "To me the only thing that could be detrimental to our economy is a national recession," he said. "I don't see any signs of that."
      Comeaux projects two more years of solid growth in Nevada, although not the double-digit sales gain of recent years.
      Falling with business sales in February were state sales tax receipts. State coffers took in $37 million in sales taxes, up only 2.9 percent from the previous February.
      For the fiscal year that began last July, the state has received $322.1 million in sales taxes, up 11.7 percent from the same period in the previous year.
      In a preliminary forecast, the Economic Forum had predicted about an 8.5 percent annual increase in sales taxes over the next two years. Gov. Bob Miller has proposed state spending of $3.05 billion in 1997-99, up 15 percent from the current two-year budget.
      The state's other big tax source -- gaming taxes -- showed a 10 percent increase in February, but remains about 1 percent down for the first eight months of the fiscal year.
      "It isn't going to be easy to predict the long-term trend," Comeaux said. "The job of the forum to make a forecast is going to be very difficult."
      The Economic Forum was created by the Legislature in 1993 to set state spending levels in response to poor forecasts by legislators and Miller in 1991.
      The governor and legislators predicted a booming economy in 1991-93 but a recession in 1992 forced the state to cut spending by $173 million, lay off 266 workers and keep 1,600 jobs vacant.