Economists Predict Nevada to See General Fund Shortage
A panel of economists have predicted that Nevada’s general fund revenues will be short $400 million dollars over the next two years due to COVID-19.
Every state in the US is trying to recover from the COVID-19 pandemic, even as the virus rages on. Positive case counts continue to climb each day and there seems to be no end in sight, as residents continue to not adhere to social distancing and face mask guidelines. In Nevada, the state faces a huge budget shortfall due to casinos being closed for several months and now operating at a much lower capacity. A panel of economists recently projected that the general fund revenues will be down around $400 million from the $8.85 billion projected in 2019.
Major Drop in Revenues
The Members of the Economic Forum gave their official forecast this week during a virtual meeting. They looked at the economic damage from the virus as well as efforts being made to slow the spread. Any potential stimulus aid was also considered.
The news of the drop comes at a time when a vaccine is in the works and residents might be able to start taking it within the next few months. A vaccine will create a sense of normalcy and hopefully make it to where more people are able to live life without the threat of contracting the deadly virus.
The five member panel consists of analysts and economists who focus on the Nevada general fund. They approved tax revenue projections by looking at predictions submitted by fiscal analysts in the state as well as Moody’s Analytics and the budget office of the governor.
The forum will meet again in May to provide its final projection for revenues. However, the totals approved this week show that the budget for the state will need to be fine-tuned for quite some time in order to recover. Major budget cuts are coming due to the impending shortfall.
In November, Governor Sisolak asked state agencies to prepare for budget cuts as high as 12% for each year of the new budget cycle. The shortfall is a reminder of how the state has been negatively impacted by the virus.
The members of the forum predicted that Nevada will bring in around $1.39 billion in revenues via gambling taxes within the next biennium. This is lower than the estimated $1.6 billion predicted from 2018.
Gambling revenues are on the rebound thankfully, after a standstill earlier in 2020. Casinos in the state were shut down for about 11 weeks to try and slow the virus spread. When the revenue totals came in for the current fiscal year and the one that finished up in the summer months were the lowest the state has seen in about 10 years.
Casinos continue to struggle as large events cannot take place, which leads to lower hotel stays, as well as less spending on dining, drinks and entertainment. Casino floors are limited to 25% capacity and coronavirus cases are at an all time high which has kept people from traveling to popular tourist destinations like Las Vegas.
Three casinos in Las Vegas are still not up and running, the Virgin Hotels, The Palms and the Rio. Other resorts have decided to close mid-week in order to cut down on operating hours due to slow business. However, slot gaming has remained a positive as players are taking to the gaming floor despite the pandemic. In some parts of the state, slot tax revenue has returned to pre-pandemic levels.
We shall see in the coming weeks how the industry transforms and if it can get back on track. Hopefully, the vaccine will be delivered as soon as possible which will help things get back to normal in the United States, as well as abroad.