Sales jump 3.1 percent in August

CARSON CITY -- Sales of taxable goods by Nevada businesses rose 3.1 percent in August, but the jump was entirely due to the governor's tax amnesty program.

The Department of Taxation reported Wednesday that businesses in Nevada sold taxable goods valued at $4.05 billion in August, up from the $3.93 billion in sales during the same month in 2007.

But $263 million of these sales occurred in previous months and were counted as August sales.

Under Gov. Jim Gibbons' tax amnesty program, businesses were allowed to pay back taxes without any penalties. Sales of those who paid back taxes in August were counted as occurring during that month.

Ben Kieckhefer, Gibbons' communications director, said about $35 million in sales taxes has been collected so far through the amnesty program. About $20.4 million of the amnesty taxes were paid in August.

Without factoring in the amnesty program receipts, business sales for August would have been down 3.6 percent from August 2007.

"The positive gain is the result of businesses that have come forth and paid delinquent taxes or previously unreported taxes," Gibbons said about the amnesty program that began in July.

"While the outcome of the amnesty program exceeds original expectations, Nevada's economy continues to struggle due to the decline in the housing market and conservative consumer spending, although construction activity remains strong in the south," he said.

"The economy isn't getting better yet," Kieckhefer added. "It is fair to expect that we face continued months of declining revenue."

State Budget Director Andrew Clinger said he is worried that there could be big declines in sales and other taxes when tax reports for October become available in two months.

October was the month Congress passed the $700 billion Wall Street bailout bill, the stock market fluctuated, and many businesses announced layoffs.

"That definitely is a concern," Clinger said.

Clinger said the national consumer confidence level fell to 38 in October, the lowest in 41 years of recording these levels by the Conference Board, a private research board. The confidence level was down 23.4 points from September.

While the Legislature does not go into session until February, Assembly Speaker Barbara Buckley, D-Las Vegas, announced Tuesday that legislators will conduct hearings in November and December on the Nevada economy. Because of declining tax revenues, about $1.2 billion in spending has been cut out of the state's two-year budget, which expires June 30.

As it is, the 3.1 percent increase in sales is the biggest for Nevada businesses since March 2007.

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.

In August, nine of Nevada's 17 counties reported declines in business sales. But in Clark County, sales were up by 5.8 percent and in Washoe County they fell by 4.6 percent.

Because of the tax amnesty program, the $80.7 million in sales taxes the state received in August were up 2 percent compared with August 2007. Without the amnesty program, sales tax receipts would have dropped by 6.6 percent.

Because of the infusion of money from the tax amnesty program, the amount of sales taxes the state has received so far during the fiscal year beginning July 1 is $1 million more than Economic Forum projections.

The Economic Forum, a group of five business leaders, sets tax revenue projections that are binding on the state. Gibbons must use the forum projections in creating the budget he submits to the Legislature next year.

Besides sales taxes, the Department of Taxation reported cigarette tax collections are $2.4 million below the Economic Forum projections, while liquor taxes are $694,000 below projections.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.