Recovery brings in more tax revenue than expected in Nevada

CARSON CITY, Nevada (AP) – Nevada’s economy is rebounding faster than in some past recessions, but variants of the coronavirus continue to raise questions about the state’s path to a full recovery.

The five-member economic forecasting panel said on Tuesday the state collected more sales and entertainment taxes than expected, but would have less revenue because a state court overturned a tax on wages.

David Schmidt, an economist in the Nevada Department of Employment, Training, and Rehabilitation, said indicators such as the employment rate and the hiring rate had diverged by region and industry throughout. recovery ; the unemployment rate in northern Nevada has rebounded to a greater extent than in the Las Vegas area and industries like warehousing employ more people than before the pandemic, while casinos and hotels are far from pre-pandemic employment levels.

Although hotels and casinos continue to struggle, Nevada collected 34% more tax revenue than expected last year, economists said. The state has collected $ 385 million in sales and use taxes since June and $ 38 million in entertainment taxes. Economists originally planned to raise $ 294 million and $ 5 million, respectively.

Income streams are of particular importance in Nevada, which does not impose state income tax on residents.

In a state where the economy relies heavily on tourism and in-person entertainment, there are 66,200 fewer workers employed in casinos and hotels than before the pandemic. However, restaurants and bars employ almost as many people as before the pandemic.

Nevada’s unemployment rate fell almost 5 percentage points from October 2020 to October 2021, but remained the highest in the country at 7.3%. The recovery has been uneven, disproportionately affecting minority groups, those without a high school diploma and women with young children, Schmidt said.

“We have been in a phase of slower growth for six to nine months. The current recession has been incredibly concentrated in the Las Vegas area, and the casino hotel industry in particular, ”he said.

Decisions by the legislature and the courts have forced the Economic Forum to revise some of its previous revenue projections.

The state’s Supreme Court ruling that the Democratic-led legislature violated the state’s constitution by extending a payroll tax will cost the state about $ 197 million over three fiscal years, said economists. The extension has not received the two-thirds support needed to raise state taxes in 2019 and, as a result of the decision, businesses will be refunded some of what they have paid since 2019 and will pay back. less in the future.

The losses have reduced what Nevada expects to collect for its general state spending fund, but will be partially offset by an increase in the mining tax passed in May, which affected income for education K -12. Russell Guindon, a tax analyst in the Legislature, said Nevada expected to collect more than $ 80 million in mining revenue in each of the next two fiscal years.

The state expects to receive a total of $ 6.7 billion in federal coronavirus relief funds, most of which is earmarked for specific services such as health care, education or housing. However, the funds will allow the state to better weather losses in tax revenue on wages and replenish the fiscal reserves it spent during the pandemic.

“Money is money,” said Craig Billings, a casino executive who sits at the Economic Forum.

“If you can use it for government services, then you’re not using other sources of revenue for government services.”


Metz is a member of the Associated Press / Report for America Statehouse News Initiative body. Report for America is a national, non-profit service program that places reporters in local newsrooms to cover undercover issues.

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