LAS VEGAS (KLAS) — The strong economy has given Nevada an extra $251 million to spend over the next three fiscal years, according to a presentation Monday in Carson City.
The Nevada Economic Forum’s report showed changes in forecasts since the last update on revenue in early December.
For fiscal year 2023 (FY2023), projected revenues are $50.1 million above the December forecasts. For FY2024, they are $111.5 million higher. And for FY2025, revenues are expected to be $89.9 higher. Those projections take into account tax credits the state has already committed to make.
For Nevada politicians, it’s like found money — just adding to the state revenue without any need to raise taxes. The extra $251 million will supplement budgets that are projected at about $5.8 billion each of the next three fiscal years. Gov. Joe Lombardo’s two-year budget is a record $11.7 billion.
The Governor’s Office was the first to stake a claim, releasing a public statement that they plan to spend $25 million on “furniture, fixtures and equipment to complete the governor’s Capital Improvement Program for Executive Branch State Office Buildings.” Four more projects were listed with plans to spend on computer upgrades, funding an Office of School Choice, funding for charter school transportation and “additional funding for critical social services infrastructure.
“Governor Lombardo remains committed to fiscal responsibility and not overspending. Significant portions of the new revenue forecasted today are one-time funds, and our office believes that they should be treated as such,” Ben Kieckhefer, Lombardo’s chief of staff, said. “With that in mind, our office will submit budget amendments to reflect Governor Lombardo’s commitment to his policy priorities and judicious spending.”
The Economic Forum’s estimates provide state government with information based on economic conditions, and the economy is still strong. Emily Mandel, a senior economist at Moody’s Analytics, said the outlook is good despite recent problems in the banking industry. She said the federal move to increase interest rates is helping.
Her outlook: “Continued economic growth, but much slower than we have seen. Avoiding a recession but having the economy more or less flatten in terms of growth over the next several years.”
Nevada’s tourism-based economy relies heavily on economic conditions outside of the state, which factor into people’s decisions to travel, spend money — and gamble.
One component of the forecasts is projections for revenue generated by casinos. That projection, while it amounted to an increase of $111.1 million, was cautious.
Michael Lawton, senior economic analyst with the Nevada Gaming Control Board, cited the sky-high revenues generated by casinos over the past two years.
“I don’t think that anyone expects the trajectory that we’re on to continue forever,” Lawton said.
“I see the Strip carrying the load, if you will, for ’24 and ’25. Maybe being down slightly but offsetting some weakness or softness that we might see in other markets,” he said. “The model is built on Strip strength. I’m very concerned in my model … the comparisons, they frighten me.”
Nevada casinos have been on a remarkable run. The gaming win has been more than $1 billion every month for the past two years — 25 months in a row. Last month alone, casinos won $1.3 billion, the sixth-highest performance all-time. But the percentage compared to last year actually dropped by 3.1% because March 2022 was the second-highest gaming win in Nevada history.
Lawton said the numbers are daunting. “A lot of things have to go right for a month to beat an all-time record. March, perhaps, could have, but what happened? Baccarat didn’t hold. Or there might be another month where baccarat doesn’t deliver volume.”
March was loaded with events, but still didn’t equal March 2022.
“The comparisons are what keep me up at night,” Lawton said.