Gov. Joe Lombardo and Nevada legislators will have more than $12.4 billion to build the state’s next two-year general fund budget, a record-setting projected tax revenue forecast approved Monday by a state economic panel.
The projection by the state’s Economic Forum — a group of five private-sector economists — marks a more than 7 percent increase compared with the last two-year budget period, which ends in June.
The forecast provides the first look at how much money Lombardo, a Republican, will be able to count on as he constructs his proposed budget, which will be submitted to the Democrat-controlled Legislature in January. The state operates on a two-year budget cycle because of the nature of the part-time Legislature, which meets every two years and is charged with reviewing and approving the governor’s proposed budget.
A governor’s office spokesperson said it would not be releasing a statement on the forecast on Monday.
It marks a somewhat smaller increase in the size of the state’s budget compared with two years ago, when expected tax revenues increased by more than $2 billion amid soaring collections from sales and gaming taxes. Although the economists projected revenue from the state’s hospitality industry to largely remain steady, the forecast of future tax revenues will likely be unable to match high-profile events such as the F1 race and Super Bowl held in Las Vegas and the opening of the Las Vegas Sphere.
The panel on Monday largely approved more conservative forecasts for the next two fiscal years, even as inflation has cooled and high interest rates have stabilized, both of which should benefit the state’s economy.
Even so, the projections come amid a cooling labor market — the state saw net job losses in the past three months compared with the prior three-month period — but layoff levels are not rising alarmingly and the state’s economic health remains far from recession levels, according to Emily Mandel, an economist at Moody’s Analytics, an economic research firm that contracts with the state to assist with the work of the forum.
The projection also comes at a time of economic uncertainty because of President-elect Donald Trump’s victory last month. Trump has pushed for large tariffs on goods coming from China, Mexico and Canada, as well as a massive deportation of undocumented immigrants — factors that have worried economists.
Mandel testified that Trump’s plan to launch a mass deportation campaign of undocumented immigrants could have major repercussions for Nevada, which has among the highest rates of foreign-born employees.
The most recent budget had a forecast of about $11.6 billion in tax revenues, but the state ended up exceeding those expectations by likely bringing in about $12 billion in revenues across the current biennium.
However, the projections only encompass general fund revenues, which compose just one portion of the state budget that also relies on billions in federal dollars and from other funds.
Tax forecasts are subject to be changed when the Economic Forum next meets in May, shortly before the end of the legislative session, to provide an updated revenue projection. In 2023, for example, the size of the budget revenues increased by more than $250 million following updated tax revenue projections.
