New Nevada revenue forecast slices $191 million out of 2026-27 budget

Nevada will collect $191 million less general fund revenue during 2026-27 than predicted in December, according to a new economic forecast released Thursday, putting any new legislation or programs requiring additional spending at risk.

The new forecast came at the end of the daylong Nevada Economic Forum, a state-mandated gathering of experts assembled to assess the Silver State’s economy and predict what that will mean for government revenues in the next two-year budget cycle.

For the last three months in Carson City, legislators have considered a swath of bills that would require extra spending, from expanded educational programming to new film tax credits. The governor’s five priority bills — including housing and education — also requested appropriations, all based on a projected budget created using the earlier economic forecast.

Many of the state’s crucial programs, including education, human services and health care, are supported through the general fund, which accounts for about 26 percent of total state revenues, according to the governor’s 2025-2027 recommended executive budget.

The Forum panel, made up of five economic and taxation experts from the private sector, lowered their projections on sales and use taxes for the biennium by about $102 million, largely in response to the economic uncertainty that has slowed down growth in recent months.

Economists anticipated lower revenues due to a decrease in sales tax, though they also pointed to economic uncertainties amid ongoing trade policies from the Trump administration as warning signs of an impending shaky economy.

All told, the economists predicted the state can expect to collect $12.24 billion in general fund revenue in the 2026-27 biennium. That’s up $203.5 million from the current 2024-25 biennium, but lower than the $12.43 billion that had been forecast in December.

Global economic trends hit home

The Trump administration’s tariffs and the ongoing trade war will do damage to the nation’s economy, according to Emily Mandel, senior economist with Moody’s Analytics, a U.S. based financial services company. She predicted the country will avoid a recession, expecting the administration to pivot away from its previous tariff plans.

Growth is already slowing in Nevada, according to Mandel. Employment growth is faltering, and it is expected to remain flat.

Nevada is also seeing some shakiness in tourism, and experts are expecting fewer visitors going forward, Mandel said. Visitation fell almost 8 percent in March, one of the steepest year-over-year drops since the coronavirus pandemic, according to data the Las Vegas Convention and Visitors Authority reported Tuesday.

Some downtrends are showing in convention traffic, while others are based on fewer households planning U.S. vacations, according to Mandel. International travel is also expected to drop, and reduced visits from Canadians will sting, Mandel said. Canadians make up about 13 percent of total visitors to Las Vegas, according to Mandel.

Gaming revenues have been high during several years of high-profile events on the Las Vegas Strip, but there is an expectation of a 5.6 percent decline, Mandel said. A modest pickup is predicted later in the biennium as the economy stabilizes.

Nevada consumers will feel the effects of tariffs through higher prices passed onto consumers, according to Mandel. She said the state is relatively insulated otherwise because of its relatively low reliance on manufacturing.

However, Nevada has the highest U.S. share of its imports coming from China, heavily concentrated in electronic and communication equipment, said David Schmidt, chief economist for the state of Nevada.

Watching the labor market

Nevada’s unemployment rate is holding steady at 5.7 percent, and while it remains the highest unemployment rate in the nation, Schmidt said the state’s labor market still appears healthy with no major layoffs.

Signs of stress in the labor market are emerging, however. Mandel said the state is seeing an increased rate of multiple job holders, and both she and Schmidt said job searches are taking longer. Schmidt said the increase in duration essentially adds nearly 1 percentage point to the state’s unemployment rate.

Schmidt noted that employment growth has fallen since high levels in 2022 and 2023 that characterized a post-pandemic rebound. Recent data has shown the demand for workers has slowed but that opportunities still exist.

“I think that collective pullback is certainly the biggest risk,” Schmidt said.

The panel will vote on projections for each major general fund revenue source throughout the Thursday meeting.

Contact Jessica Hill at jehill@reviewjournal.com and McKenna Ross at mross@reviewjournal.com. Follow @jess_hillyeah and @mckenna_ross_ on X.