LAS VEGAS (KLAS) — The strong economy has given Nevada an additional $251 million over the next three fiscal years, according to a presentation Monday in Carson City.
The Nevada Economic Forum report showed changes in forecasts since earnings were last updated in early December.
For fiscal year 2023 (FY2023), projected revenue is $50.1 million higher than December forecast. For fiscal 2024, they’re $111.5 million higher. And for fiscal 2025, revenue is expected to be $89.9 higher. These projections take into account tax credits that the state has already committed to.
For Nevada politicians, it’s like found money — it simply contributes to state revenue without having to collect taxes. The additional $251 million will complement budgets estimated at approximately $5.8 billion each for 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 make a claim, releasing a public statement that it plans to spend $25 million on “furniture, fixtures and equipment to complete the governor’s capital improvement program for executive branch buildings.” Four other projects were listed with plans for spending on computer upgrades, funding an Office of School Choice, funding charter school transportation, and “additional funding for critical social services infrastructure.”
“Governor Lombardo remains committed to fiscal responsibility and is not going overboard. A significant portion of new revenue projected today is one-off funds and our office believes they should be treated as such,” said Ben Kieckhefer, Lombardo’s chief of staff. “Against this backdrop, our office will present budgetary changes to reflect Governor Lombardo’s commitment to his political priorities and prudent spending.”
Michael Nakamoto of the Nevada Fiscal Analysis Division breaks the good news at Monday’s economic forum in Carson City.
Economic Forum estimates provide information to the state government based on economic conditions and the economy is still strong. Emily Mandel, senior economist at Moody’s Analytics, said the outlook is good despite the recent troubles in the banking industry. She said the federal move to raise interest rates was helpful.
Her outlook: “Continued economic growth, but much slower than before. Avoid a recession but let the economy more or less flatten out in terms of growth over the next few years.”
Nevada’s tourism-based economy is heavily dependent on out-of-state economic conditions, which affect people’s decisions to travel, spend — and gamble.
One component of the forecasts are projections for revenue generated by casinos. That forecast, while amounting to a $111.1 million increase, was cautious.
Michael Lawton, senior economic analyst at the Nevada Gaming Control Board, pointed to the sky-high revenue that casinos have generated over the past two years.
“I don’t think anyone expects the path we’re on to continue forever,” Lawton said.
Michael Lawton, Senior Economic Analyst at Gaming Control Board, discusses the challenges of meeting sustained growth expectations.
“I see the Strip bearing the burden, if you will, for ’24 and ’25. Maybe slightly down, but offsetting some weakness or softness that we might be seeing in other markets,” he said. “The model is based on strip strength. I’m very worried about my model… the comparisons scare me.”
Nevada casinos have had a remarkable run. Gaming revenue has exceeded $1 billion every month for the past two years – 25 straight months. In the last month alone, casinos won $1.3 billion, the sixth-highest performance of all time. But the year-over-year percentage is actually down 3.1% because March 2022 was the second highest gambling win in Nevada history.
Lawton said the numbers are startling. “A lot has to go well for a month to break an all-time record. It might have been March, but what happened? Baccarat didn’t last. Or there could be another month where baccarat doesn’t deliver volume.”
March was full of events, but still not comparable to March 2022.
“The comparisons keep me up at night,” Lawton said.
Comments are closed.