Nevada revenue ends up $67.1 million above projection for fiscal year 2017
The state finished fiscal 2017 with a total of $3.88 billion in General Fund revenue.
That is within 1.8 percent of the total the Economic Forum predicted at its May 1 meeting and according to Mike Willden, chief of staff to Gov. Brian Sandoval, it’s actually 1.8 percent above that projection — $67.1 million to the good.
“This is almost a testament to the Economic Forum,” he said.
The forum is a panel of five private industry financial experts appointed to project General Fund revenues for the state. Those projections must be used to build the state budget unless the governor and Legislature decide to raise taxes to cover additions to the spending plan.
The other factor that contributed to the state finishing above projections is the fact that companies like Tesla, Panasonic and Switch didn’t claim all of the tax credit deductions they were expected to.
Willden said almost all of the nearly two-dozen major revenue streams that make up the General Fund were within a percent or so of what was predicted. The largest pot of money, the sales tax, finished the year at a hair over $1 billion, just three-tenths of a percent or $3.5 million over projections.
The second largest revenue stream, the gaming tax, came in at $730.5 million, half a million or a tenth of a percent under projections.
The commerce tax on the income of businesses that make more than $4 million a year also came in pretty much as projected, finishing the year at $197.8 million. That’s just $5.6 million shy of the target.
“The only wildcard is marijuana,” Willden said.
That revenue stream is tiny but it generated nearly $3.7 million in just the first month of collections. He said that’s far more than projected because retail sales of pot weren’t expected to bring in anything until August. Pot sales brought in $2.7 million in sales tax money along with $974,060 from the 15 percent wholesale tax on marijuana — nearly double the $548,000 projected.
Willden pointed out that the $2.71 million from the 10 percent sales tax is earmarked for the state’s Rainy Day Fund — the emergency account to cover state costs in case of an economic downturn. And the money from the 15 percent wholesale tax goes to schools.
Pot sales are expected to add $63.5 million to the Rainy Day Fund over the two-year budget cycle, helping it reach the budgeted goal of just over $200 million by the end of fiscal year 2019.
Willden said they won’t know if pot sales will continue to outstrip projections for several months.
The mining tax also generated a lot more than expected in fiscal year 2017 but, at $25.9 million, it’s a tiny piece of the puzzle.
Despite a dollar-a-pack increase in the cigarette tax, that revenue source brought in $180.7 million in fiscal year 2017, $5.7 million more than projected.
The other factor that contributed to the state finishing above projections is the fact that companies like Tesla, Panasonic and Switch didn’t claim all of the tax credit deductions they were expected to. Tax credits against the Modified Busness and Gaming Percentage taxes were expected to reduce General Fund revenues by $147.1 million in 2017. Businesses took $115.6 million, a difference of $31.5 million that accounts for about half the $67.1 million in unexpected collections.
Three months into fiscal year 2018, Willden said things are also looking good with sales tax revenues a bit ahead of projections and gaming pretty much on target.