Minor tax revenues nosedive in Nevada

CARSON CITY – State revenue from so-called minor tax sources is expected to drop by about 35 percent for the 2013-15 budget period, according to a technical advisory committee of legislative and local government officials that met Monday.

But the anticipated shortfall of nearly $488 million over what Nevada has in its current two-year budget didn’t upset state Budget Director Jeff Mohlenkamp. He said the expected decline in minor tax revenue is why Gov. Brian Sandoval has proposed that the Legislature extend all or part of $620 million in business, sales and other taxes that would otherwise expire after June 30.

Chances of Sandoval winning the extension are good because Republican leaders, who opposed the extension in 2011, have expressed support for Sandoval’s proposed extension. But nothing is guaranteed because Democrats, who supported the extension, are four votes shy of the two-thirds majority to pass tax increases.

Minor tax sources are expected to bring in $977 million in the 2013-15 period, $488 million less than the current $1.465 billion.

“This is in line with what we expected,” said Mohlenkamp, a member of the technical advisory committee.

The Economic Forum, a group of five private business leaders, will meet Friday to determine how much money in total taxes and fees state government will have to spend over the next two years. Their estimates are binding on the governor in his preparation of the 2013-15 budget.

But Sandoval can create a budget that is built on the assumption that the taxes will be continued, Mohlenkamp said. The technical advisory committee, however, cannot make that assumption and must base its estimates on current taxes that will be in place in July 2013.

The estimates made by the technical committee on minor tax revenues will be used by the Economic Forum in its estimates of state tax and fee revenue.

But there were some alarming estimates made by the technical committee.

Revenue from the net proceeds of mining tax will drop by $141 million over the next two years. That is largely because state government must pay back the mining industry for an advance payment of about
$100 million made two years ago to help the state get through a revenue crisis. Net proceed revenue in 2013-15 will be $86 million, down from $227 million. Mohlenkamp said Sandoval may propose postponing the payment until better economic times.

Revenue from this mining tax is substantial, but the Economic Forum considers it a minor tax in a state with $3 billion in annual funds from taxes. Sales, gaming, insurance premium, live entertainment and business payrolls are considered major taxes on which the forum bases its prediction.

Revenue from unclaimed property, administered by the treasurer’s office, will be down nearly $63 million. The state will receive $66 million over two years, down from $128 million.

Revenue from the government services or license plate tax will drop by $125 million unless the tax is extended by the Legislature.

Revenue from the business license fee, which is now $200 a year, will decline $59 million, unless the Legislature continues the taxes. The fee would fall to $100 a year if it is not extended.

Revenue from the cigarette tax will fall by $7 million and secretary of state fees by $2 million. The drop in smoking by locals and tourists is considered the reason for the decline in cigarette taxes.

Revenue from court administrative assessments will drop by $9 million.

Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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