Sales-tax revenue drops in July

CARSON CITY -- Nevada received more bleak economic news Friday when the Department of Taxation reported a 5.2 percent drop in the sales of taxable products by businesses in the state.

Statewide sales of taxable products in July were $3.786 billion, down from $3.994 billion in July 2007.

"Nevada continues to feel the effects of the slow housing market and overall sluggish economy, and our revenue collections continue to decline accordingly," Gov. Jim Gibbons said in a statement.

In Clark County, businesses reported taxable sales of $2.8 billion, a 4.9 percent drop from $2.95 billion in July 2007.

Washoe County business sales were $522 million, down 8.8 percent from $573 million a year earlier.

In all, eight of the 17 counties in Nevada posted declines. Two sparsely populated rural counties, Lincoln and Esmeralda, posted increases in business sales of 165 percent and 139, respectively.

Their total combined sales, however, was less than $4 million, barely 0.1 percent of the state total.

Sales of taxable goods by businesses in Nevada have dropped every month but two since April 2007.

During the two months of growth, increases were less than 1 percent.

Gibbons pointed to one piece of good news in the Department of Taxation report: modest increases in consumer spending.

The Taxation Department report shows that vehicle and auto part sales statewide were $445.7 million in July, down 10.3 percent; while building material sales were to $188.9 million, down 9 percent.

Restaurant-bar sales were $531.7 million in July, down 7 percent.

Clothing store sales were $228.3 million in July, up 0.8 percent; general merchandise sales amounted to $330.1 million, up 0.6 percent; and durable goods wholesaling added up to $301.4 million, down 7.6 percent.

The report also showed that excise taxes collected on cigarettes, liquor and other sources during July were $14.9 million. That's down 18.2 percent compared with July 2007.

Chief state economist Bill Anderson doesn't expect a quick recovery.

"I do not project a return to near boomlike conditions, but more modest growth," Anderson said. "We have taken a relatively hard hit."

Nevada's economy was booming earlier this decade, Anderson said, with double-digit monthly increases in sales, and unemployment falling below 4 percent.

Nevada unemployment hit 7.1 percent last month, the highest in 23 years.

Anderson expects a slight increase in employment in 2009, followed by larger increases in 2010 and 2011.

He envisioned job growth of 1.8 percent to 2.4 percent in 2010-11, far below the 6 percent increases Nevada experienced in the 2004-06 period.

About 33 percent of state tax revenue comes from sales taxes. So far this fiscal year, sales tax receipts are $2 million below projections from the Economic Forum, five business leaders who determine how much revenue is available for the state to spend.

Cigarette sales also have dropped below projections. In July, the state received nearly $15 million in cigarette taxes, or an 18 percent drop from a year earlier.

Taxes from liquor sales, however, are $264,000 above projections.

The Gaming Control Board reported this month that gaming revenue in July fell 13 percent from last year and that 2008 likely will end up with the biggest percentage drop in history. Gaming taxes produce 28 percent of state tax revenue.

But Ben Kieckhefer, Gibbons' communications director, said the governor won't have to call the Legislature into a special session to deal with the continuing downturn.

Kieckhefer said the state has money available to cover its expenses, at least until the Legislature goes into its regular session in February.

Since January, Gibbons and legislators have lopped $1.2 billion off the state's two-year budget of $6.8 billion.

This summer, state Budget Director Andrew Clinger reported total state tax revenue had declined in the fiscal year ending June 30. That was the first annual decline in more than 30 years.