Report: Nevada budget hole will get deeper

CARSON CITY — A preliminary analysis shows the state Economic Forum today reduced by $470 million its projections of how much tax revenue state government will receive over the next two years.

In December, the five business leaders on the forum estimated state government would receive about $5.65 billion in tax revenue during the period from July 1, 2009. through June 30, 2011.

But because of the continuing recession, members just today finished modifying the earlier projection. Members now estimate that tax revenues will be about $5.3 billion for the two-year period. That would be the smallest amount of taxes revenue received by the state since the 2003-05 two-year period.

Besides projecting tax revenue for the next two years, the Economic Forum also estimated that revenue during the current fiscal year, which ends June 30, will be about $50 million less than the estimate it made in December.

In addition, it estimated that a 3 percentage point room tax increases — approved by the Legislature in March — will bring in $220 million over the next two years.

That is $72 million less that the $292 million Gibbons projected room taxes would bring in when he included the increase in his proposed budget. Gibbons did not sign the bill increasing the room tax, but let it go into effect by not vetoing it.

Counting these reductions, the total decline in state government tax revenue would be more than $470 million.

Precise figures on the effects of the day's actions should be completed within hours by legislative fiscal analysts.

Whatever estimates the forum makes by law are binding on Gov. Jim Gibbons and the Legislature in creating the state budget for the next two years.

Some legislators have contended the state needs to spend $8 billion in the next two years to keep services at the level contemplated by the Legislature when it adjourned in June 2007.

But Gibbons indicated Thursday that he would veto any tax increases. He estimated state revenue would fall $350 million to $500 million short of the December estimates by the Economic Forum.

To cover that shortfall, Gibbons said he would ask the Legislature to add on to the 6 percent salary cuts for state employees, teachers and college workers that he proposed in January.