CARSON CITY -- The Economic Forum predicted Thursday that Nevada's state government will reap $6.92 billion in taxes and fees during the 2007-09 budget period, about $700 million more than the state is expected to take in by the end of the current two-year budget cycle.

The projections by the forum must be used by the incoming governor, Jim Gibbons, and the Legislature in crafting the state budget for the 2007-08 and 2008-09 fiscal years. The forum is a group of five business leaders that estimates revenue produced by state taxes and fees. Members meet again May 1 to make a final estimate of revenue before the Legislature adjourns its 2007 session.

Economic Forum Chairwoman Deborah Pierce said state tax and fee revenue increases are returning to more normal patterns after three years of double-digit percentages. Her committee estimates that state tax and fee revenue will grow by 5.6 percent in the 2007-08 fiscal year and 7 percent in the following fiscal year.

"All of the economists who gave us information predict 2007 is going to be a year where the economy slows throughout the country and Nevada," added Pierce, chief financial officer at Hooters Hotel in Las Vegas. "Then we will see a pick up in 2008-09."

Nevada's economy already has slowed, Pierce said. Revenue during the current year from real property transfer taxes is down 24.9 percent from the same period last year. She said home prices and sales have dropped as the real estate market cooled in Nevada and throughout the country. Nevada assesses a $1.30 per $500 value tax on sales of property and buildings.

Economic Forum members said they continue to have confidence in the state economy and noted that another boom might come in 2008-09 with the opening of five hotel-casino resorts.

"We are lucky to be living in Nevada," Pierce said. "We are still in a lot better shape than most other states."

Gibbons spokesman Brent Boynton said the governor-elect had no comment on the effect the estimates will have on his spending proposals because he had not reviewed them.

The estimates announced Thursday are about $70 million less than projections members made during a Nov. 1 meeting. Since that meeting, new reports were compiled that showed gaming revenue for the first four months of the current fiscal year fell 1.2 percent from the same period a year earlier.

In addition, voters on Nov. 7 passed Question 8, which provides sales tax exemptions on the value of motor vehicles that are traded when people purchase another vehicle. Those exemptions will cost state government about $45 million in revenue during the next two years, officials estimated.

Still, the state will take in about $5 million more in tax revenue than it is permitted to spend on ongoing government functions, such as public education. A state law passed in 1979 limits the annual percentage increase in general government spending to a percentage equal to the rate of inflation plus the rate of population growth. If the state has revenue above that cap, the law limits the state to four options: return the excess revenue to taxpayers in the form of rebates; place it into a "rainy day fund" for unexpected emergency expenses; spent it on highway construction or use it for construction of state buildings.

But because the spending cap is not part of the Nevada constitution, the limit can be exceeded if a majority of the Legislature votes to exceed it and the governor approves.