EDITORIAL: We’re in the money? Legislature dreads bad news
A somber mood envelopes Carson City. The money tree has developed a nasty fungus.
On Thursday, the Nevada Economic Forum will issue its much-anticipated revenue forecasts. The panel, which lawmakers created in 1993 to shield themselves from accountability and their own worst instincts, consists of five appointed private-sector “experts” charged with guessing how much money the state will have to spend over the coming two-year budget cycle. The projections are binding on lawmakers, who must, by law, pass a balanced spending blueprint.
In December, members of the forum predicted that the state would generate about $12.4 billion in revenue over the 2025-27 biennium, a modest 3.4 percent increase over the previous two-year period. But ample warning signs have accumulated since, including a significant drop in Las Vegas tourism last month and the uncertainty of President Donald Trump’s tariff plans. The state relies primarily on gaming and sales taxes for revenue.
In an op-ed this week for the Reno Gazette Journal, state Sen. Robin Titus, a Republican from Wellington, noted that general fund revenue is down $102 million year to date, a decline of more than 3 percent when compared with the previous fiscal year.
The problems are across the board, including expecting shortfalls in gaming and sales taxes, the live entertainment tax (down nearly 6 percent) and the modified business tax (up only than 2 percent, well below expectations).
The state’s $1.3 billion rainy day fund offers a bright spot, but dipping into emergency money to cover ongoing spending is a fool’s errand in most circumstances.
Legislative Democrats and various special-interest groups are already squealing and blaming the president. That’s a deflection. They should have seen this coming. Lawmakers have resisted prudent and conservative budgeting in recent years — expanding eligibility for expensive safety net programs such as Medicaid, passing record spending increases for the public schools — in large part thanks to a torrent of federal money flooding Nevada and other states under the guise of COVID relief. The pandemic is long over. What happens when the spigot dries up?
There is no appetite — nor the votes — for tax hikes despite efforts by majority Democrats to massage the property tax formula and other gimmicks. Living with lower revenue projections requires paring wish lists, sidelining expensive new government spending initiatives and focusing on priorities that don’t boost baseline budgets. That may be unfortunate for the lobbyists and special interests with their hands out. But it’s not so bad for the Nevadans who foot the bill.