Saturday, December 28, 2002
Copyright © Las Vegas Review-Journal

State's taxable sales increase slightly

Lackluster 1.8 percent boost in October not good for Nevada's budget deficit

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CARSON CITY -- Consumers pushed Nevada's taxable sales a modest 1.8 percent higher in October over the same month a year ago, putting the state budget even further into the red, Gov. Kenny Guinn said Friday.

"Without a dramatic turnaround, our deficit picture will continue to grow," Guinn said.

The October taxable sales numbers, which come off of a weak October 2001, when only a 1.2 percent increase was reported over October 2000, is cause for concern, he said.

The October 2001 report was the first full month of activity following the Sept. 11, 2001, terrorist attacks.

Sales taxes, the single biggest revenue source for the state budget, are collected on the purchases of taxable goods and services made each month by Nevada residents and visitors.

Consumers generate taxable sales through a variety of purchases, from cars to restaurant bills. The state collects a 2 percent tax from the taxable sales.

Guinn said state sales tax collections, which for the fiscal year to date are up only 4.4 percent, would need to average 12.8 percent through the end of the year to hit the original estimates used to build and balance the current budget.

"Under any reasonable scenario, (that) will not occur," he said.

The October taxable sales report, because it did not hit projections, helped push the state another $4.7 million into the red.

Nevada is now $119 million short in tax revenue compared to what was forecast and used to build the budget.

Nevada's taxable sales in October totaled $2.7 billion, up 1.8 percent over the $2.65 billion reported in October 2001.

In Clark County, taxable sales rose a healthier 3 percent to $1.95 billion.

But Washoe County taxable sales were down 0.7 percent to $442 million. Ten of the state's 17 counties reported declines in taxable sales in October.

Major taxable sales categories showing increases in the October report include eating and drinking places statewide, up 6 percent, and apparel and accessory stores, up 18.3 percent.

In Clark County, eating and drinking places were up 7.2 percent. In Washoe County they were up 3.2 percent.

But a big negative in the report came from automotive dealers and gasoline, which reported an 8.8 percent decline statewide in October over October 2001. Clark County reported an identical decline, while the category showed a 5.2 percent increase in Washoe County.

Auto sales, with the no-interest loans and cash rebates, had been helping keep the taxable sales numbers in positive territory over the past year.

Other taxable sales categories showing increases in October were food stores, up a modest 0.3 percent, and miscellaneous retail, up 5.4 percent.

Guinn said one modest note of optimism in the report is the growth in consumer spending in retail categories, bars and restaurants and construction.