CARSON CITY — A state panel Monday approved financial projections for the next two years that see revenue from sales, gaming and other taxes growing at better than the inflation rate through mid-2021 for a total increase of $591 million.
That increase for 2019-2021, a 7.2 percent rise over the two-year cycle, or biennium, that ends in June, includes a $138 million cumulative windfall as tax credits for the Tesla Gigafactory in Sparks and other projects expire and come off the state’s books.
The numbers, approved Monday by the Nevada Economic Forum, form the basis of back-to-back annual budgets lawmakers will set in the legislative session that starts in February.
“I am encouraged by how the state is performing,” Gov.-elect Steve Sisolak said in a statement released later in the day. He said he looks forward to reviewing the final revenue forecast.
Overall, the state’s general fund revenue for 2019-2021 biennium is forecast at $8.835 billion, up from the current $8.244 billion. The biennium covers two state fiscal years, which run July to June.
Broken down by fiscal year, revenue is projected to increase 2.8 percent in fiscal 2020 and 3.4 percent in fiscal 2021. Inflation in the U.S. is projected to run between 2 and 2.5 percent annually during the same period.
The state’s general fund represents about 30 percent of the total state budget. Sales tax is its largest revenue component, about 30 percent of the total. Figures approved by the Economic Forum project sales tax growth at a cumulative 10.8 percent over the next two years, or $255 million.
That equates to a year-over-year increase of 5.2 percent next year and nearly 4 percent the year after that. Ten years after the Great Recession, the state’s economy is projected to see continued growth, but with a slowdown starting in 2020.
The state’s next-largest revenue producer, a percentage of gaming fees, represents about 18 percent of total general fund revenue. The tax is expected to grow just over 3 percent over the next two years compared to the current biennium, or about $48 million.
Revenues from business taxes are projected to vary, with most rising between 1.4 and 1.7 percent but mining business taxes declining 3.4 percent. Together they account for about 16 percent of revenue.
Revenue from insurance premium taxes, which makes up 10 percent of the total revenue pie, is expected to rise nearly $92 million, or 10.7 percent, before tax credits are applied. And collections from the real property transfer tax will see an increase of $17 million, or 8.1 percent.
The panel took about four hours to work through and adopt the final numbers, mostly accepting forecasts in the middle of the range for each category.