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Jul. 24, 2008
Copyright © Las Vegas Review-Journal

ECONOMIC DOWNTURN: Nevada's fiscal woes among worst

State ranks in top three in U.S. for revenue declines, revenue gaps

By ED VOGEL
REVIEW-JOURNAL CAPITAL BUREAU

CARSON CITY -- As if you needed more bad news, Nevada's economic downturn now ranks as one of the worst among the 50 states.

A National Conference of State Legislatures report released Wednesday found that tax revenue in Nevada fell by 7 percent in the fiscal year that ended June 30 compared to the previous year.

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The Biggest loser

Nevada ranked No. 3 among the 17 states that reported revenue declines, led by a 7.5 percent drop in Oregon and a 7.3 percent decline in Florida.

While California reported a $4.5 billion decline in revenue, that represented 4.5 percent of its expected revenue total.

The state with the most severe state government spending problem might be Arizona.

It reported a 14.1 percent "revenue gap," which represents the percentage difference between available tax revenue and planned general fund spending.

Nevada was second at 11.4 percent. Only five states had revenue gaps greater than 5 percent.

The NCSL is an association that represents interests of state legislatures. It based its report on statistics collected from state legislative fiscal officers.

Twenty-eight states, including Nevada, expect further declines in the current fiscal year, according to the NCSL report. Nevada already has approved measures to reduce spending by $800 million in the current fiscal year.

Seven states did not participate in the current fiscal year portion of the study, and six of them are states where revenue is falling.

Only 13 states expect their revenue to increase in the fiscal year that ends next June 30.

"We are all going through the same problems," said Ben Kieckhefer, a spokesman for Gov. Jim Gibbons.

He said there is no magic tax that can snap Nevada and other states out of the economic doldrums. Gibbons remains committed in his opposition to any tax increase, Kieckhefer said.

"When the economy is struggling, it is not a good time to raise taxes," he added. "We need to cope with the revenue we have and weather the storm. If there were a recession-proof tax that didn't hurt people, then someone at MIT would have thought of it."

Kieckhefer said Nevada faces a special problem because of its tourist-based economy.

"It is not surprising that we are faced with economic problems when the national economy experiences a downturn," he said.

That is borne out by the report. Florida also is a tourist-dependent state, and its fiscal year 2008 revenue drop was slightly more than Nevada's.

Florida cut spending by more than $800 million and laid off 2,700 state employees. Three other states also laid off state employees.

Hawaii, perhaps the most tourist-dependent state, did not submit its fiscal year 2009 estimates in time to be included in the study. But its legislative analysts predict a decline in tourism over the next two years.

Seven states, including New York and Massachusetts, raised taxes, primarily cigarette taxes, to cope with the revenue declines.

Four states expanded gaming. New Hampshire raised the betting limit and added games of chance. Rhode Island authorized 24-hour gaming three days a week.

But most, like Nevada, slashed spending. Since November, Nevada has cut spending in its two-year budget that ends next June 30 by $1.2 million. That is equivalent to 17.7 percent of its $6.8 billion two-year budget.

The few states where economies showed strong growth were led by North Dakota and Alaska. Both states have abundant oil and gas resources. North Dakota agriculture has been flourishing because of the use of corn in generating ethanol, a gasoline additive.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: tim wrote on July 24, 2008 04:42 PM: the gov.is run by people who take care of themselves first,corporations,gov.unions,the lazy welfare class,then when they run out of money come right back to the taxpayer for more.endless cycle.bring on the revolution! CAS127 wrote on July 24, 2008 03:37 PM: "But most, like Nevada, slashed spending" How many times must it be said for it to sink into the heads of the otherwise fair and intelligent RJ journalists - reductions in "budgeted increases" are not "cuts in spending" - except in the bizarro universe that public sector unions have created - with themselves as gods not to be questioned. If the kleptocracy spent $100 this year and giddily "projects" that it will be able to spend $120 next year - but only is able to actually spend $105 next year (because the economy continues to crater and free economy workers are eating dog food, eying the lying kleptocrats, and fingering their handguns...) how would that be a cut?! - except in klepto-bizarro world? If reductions in obscenely massaged "projections" are "cuts" - what is the name for it if (heh) the kleptos spent $100 this year and (drumroll) had to only spend $95 next? If $100 to $105 is a cut, WTF is $100 to $95 supposed to be called in klepto-bizarro world? How long does it take for people to realize that our governments are basically run by sociopaths? muah wrote on July 24, 2008 10:46 AM: Hey Hello- I can be 50% more efficient than you! Stop Handouts! ths wrote on July 24, 2008 08:22 AM: I have never seen so many ignorant people before. This state and I am getting taxed to much. Yes Hawaii (you must have a Nevada education as you could not spell the state correctly) might have lower sales tax, but you are doing a sampling and you need to look at all taxes combined. This survey shows we need to do two things. Diversify our tax basin and diversify our economy and ensure all businesses pay their fair amount of taxes. Just diversifying the business base without taxing them will actually hurt the budget even worse. Businesses need basic services as well and we need to ensure they pay their way. No more excuses that the business is barely surviving as they are now. Many survive in less business friendly states then here. Hello wrote on July 24, 2008 08:01 AM: Four words: Cut state funded programs PeeWee wrote on July 24, 2008 07:40 AM: God forbid we could have a state lottery and reap the massive benefits of such a thing. nn wrote on July 24, 2008 06:46 AM: News Flash:WASHINGTON - The number of newly laid off people filing claims for unemployment benefits bolted past 400,000 last week as companies trimmed their work forces to cope with a slowing economy. Get with the program Nevada. Lets see some of those layoffs. Your lagging behind the rest of the country. You really cannot affort to hire anymore. If anything, you need to be laying of a lot of people. You can't tax your way out. Your stealing, taxing too much already and with that da_m cop sales tax, visitors as well as residents cannot afford it. That should be repealed. Its actually cheaper to shop in Hawii at 4%. Whats wrong with Nevada?? tim wrote on July 24, 2008 06:34 AM: we're so poor we can still build multi-billion dollar casinos,give pay raises to state workers and if those pesky taxpayers would just shut up,we could even raise taxes.boy it sucks living in nv.coming from a gov.lackey i have to laugh at this stupid article. x wrote on July 24, 2008 06:10 AM: x KL wrote on July 24, 2008 06:09 AM: Well Duu! State ranks in top three in U.S. for revenue declines, revenue gaps Let us repeat this statement. "The WORST among the 50 states." That because they have been eating too many steak dinners and spending hog wild with the tax payers money. People. We are in a RECESSION.. Nevada needs to have its hands slapped for bad management and wasteful spending. This state is totally out of control in every aspect of government all the way down to the low life cops. Abuse of taxpayers revenue. When will they ever learn. Time to take away their check book and lay these clown off. Time to reduce the GLUT of cops and their excessive high payroll. Time to trim the FAT!!! Remember these idiots at voting time. While your home barely making it, they are living high on the Hog spending your money..