Thread by @MichelleRindels

The #EconomicForum is meeting today to set a forecast for Nevada's general fund revenues for the current and next two fiscal years. That will form the basis for the governor's recommended budget going into the #nvleg session in February.

Watch here:

Gaming tax revenue, which accounts for 18 percent of Nevada's general fund revenue, has been rocked by the pandemic, as evidenced by this chart.

Forecasts vary based on everything from new 25% capacity limits on casino floors, to rising COVID cases and midweek resort closures.

Table games more dependent on tourists but Nevadans' loyalty to slots is helping buoy gambling tax.

In some markets, slot revenue is already back up to pre-pandemic levels.

Still, without NFR rodeo, CES and big New Year parties, gambling tax in for 'bumpy road' next few months.

Gaming Control Board analyst Michael Lawton on the effect of uncertainty about whether more federal stimulus money will happen and spur more gambling / tourism:

"I've been told by several operators, 'yes stimulus is helping.' And they also feel that it's wearing off."

News that Nevada expects to start distributing COVID vaccine in days and work through close to 200,000 people by the end of January is big for the budget.

"That the vaccines are going to start getting distributed, I think that's encouraging news to a forecaster." LCB's Guindon.

All the forecasters have expressed surprise that gaming tax revenues have been so strong in spite of the economic conditions.

Guindon: "The concern, as a forecaster, is 'well, is that cabin fever effect that's driving some of this? And so it won't be sustaining itself?'"

The Live Entertainment Tax is perhaps the revenue stream most affected by the pandemic. Revenues were down 99.6% in October compared with year earlier.

But Gaming Control Board thinks recovery could be "swifter and stronger than originally anticipated" once capacity caps lift.

For perspective, LET taxes make up about 3 percent of general fund revenues, and are assessed on tickets to large events.

Forecasters don't expect a rebound to pre-pandemic levels until mid-2022, largely because of the logistics of restarting long-shuttered shows/events.

Forecasters emphasizing just how difficult it is to predict what will happen to the Live Entertainment Tax and how quickly the shows and events industry will rise from the ashes of pandemic closures.

LCB's Russell Guindon says he's making more of a guess than a forecast.

#EconomicForum projects Nevada will bring in about $183 million from Live Entertainment Tax in the next biennium (two years starting mid-2021).

That's far below the $258 million that the forum predicted for this revenue stream back in December 2018, for the current biennium.

In practical terms, this $75M drop in ticket sale taxes is enough to wipe out entire education programs.

For example, Nevada budgeted $72M in 2017 to start a weighted funding (SB178) program, adding $1,200 per pupil with higher needs. Drops of this level make things disappear.

The Modified Business Tax (MBT) rises and falls based on job gains/losses and payroll growth/retraction.

For the dominant "general business" category, you can see major job losses affecting collections.

The tax itself is about 1.5% on payroll and revenues = 16% of general fund

Interestingly though, the financial services sector - which has a different MBT rate - is actually growing during pandemic.

Analyst attributes this to more work during PPP administration process and mortgage refinancing boom.

Another winner in this economy is the mining sector, as seen from these projections on growth in jobs and payrolls, and therefore, MBT revenue.

#EconomicForum approves a forecast that predicts $1.45 billion in MBT revenue in the coming biennium.

That's up from the prediction the forum made two years ago, when they predicted $1.37 billion in MBT revenue in the biennium we're currently in.

Re: real estate transfer tax, economist Susanna Powers notes the differences between Great Recession and now.

Today, homeowners having trouble making payments will have a lot better market to sell their home into. Way fewer underwater homes, lending standards high, prices high.

#EconomicForum is forecasting about $211 million in real estate transfer tax revenue in the upcoming biennium.

That is less than two years ago, when the forum predicted $227 million for the current biennium.

#EconomicForum returned and approved forecasts.

Member Linda Rosenthal notes that the forum's prediction in 2018 was that we'd have $4.7 billion to spend in FY21 (current year).

Prediction today is $4.012 billion in FY21. Almost $700 million less than where we thought we'd be.