May 5, 2021 - 9:00 pm
Happy days are here again in Carson City.
On Tuesday, the state Economic Forum released its revenue projections, which are binding on lawmakers as they formulate a budget blueprint. The numbers anticipate a broad and full recovery from the pandemic shutdowns that devastated gaming and sales tax collections last year.
In December, the five-member panel projected that lawmakers would have $8.5 billion in general fund tax collections to spend over the two-year budget cycle beginning in July. The revised figure released this week is $9.1 billion. In addition, panel members adjusted upward by $325 million their previous estimate of the tax take during the current fiscal year.
That means lawmakers will have almost $910 million more to spend than anticipated as they near the end of the current session. Not too shabby, given that Gov. Steve Sisolak was wailing about budget cuts just months ago. The private sector has proven much more resilient than many experts anticipated.
All this highlights the fiscal folly of President Joe Biden’s American Rescue Plan, which included more than $350 billion in virus “relief” for state and local governments. Nevada will receive a $2.9 billion handout under the law — and that’s pure gravy on top of the nearly $1 billion that has now materialized thanks to the Economic Forum.
Nor is Nevada an outlier. Despite economic closures, tax receipts were up in seven Western states — California, Washington, Idaho, Utah, Arizona, New Mexico and Colorado — between April and December of 2020 when compared to 2019, The New York Times reported in March. “New data shows that a year after the pandemic wrought economic devastation around the country, forcing states to revise their revenue forecasts and prepare for the worst,” the Times found, “for many the worst didn’t come.”
The Times credits the Trump stimulus bills passed in the early months of the pandemic — providing beefed up unemployment benefits and assistance to small businesses — with helping cushion the blow to states. Perhaps. But whatever the reason, the reality on the ground undercuts the justification for the state handouts Democrats dropped into the latest relief bill. Republicans were assailed for calling the largess a bailout for big-spending blue states, but — while red states got in line also — that turns out to be exactly what it was.
Don’t expect Nevada to give the federal money back, of course. Gov. Sisolak said the windfall will “put us in a better position to begin stabilizing the state’s fiscal position, restoring critical services and getting assistance to Nevadans most in need.” We’ll await the details. But the last thing lawmakers should do is to build one-shot funds into baseline budgets — and, as they sit atop this pile of cash, tax hikes should be out of the question.