Nevada families struggle as inflation nears 9 percent and gasoline prices approach $6 a gallon. But in Carson City, they’re singing “Happy Days Are Here Again.”
On Thursday, members of the state Economic Forum — which makes binding revenue forecasts that lawmakers use to set state spending — revealed during a virtual meeting that tax collections have vastly exceeded expectations. More than 10-months into the two-year budget cycle, the state is sitting on nearly $800 million more than the $4.4 billion experts had anticipated for fiscal 2022.
And this doesn’t even include the $6.74 billion that the state received in pandemic bailout money from Washington.
In fact, fears that virus shutdowns and restrictions would crater the state budget through the decade have not materialized. Even during the teeth of the pandemic, state spending continued to rise. In addition, revenue for fiscal 2021 increased at more than double the expected rate. That trend is now accelerating into fiscal 2022 and 2023.
“It is a bit shocking to see the magnitude of the differences,” said forum chair Linda Rosenthal, the Nevada Independent reported.
The numbers reflect a combination of factors, including wage gains, robust consumer activity and a rebound of the gaming and hospitality industries. Soaring prices mean higher sales tax collections. The easy-money cash handouts from the White House also juiced government coffers.
Yet with a national recession looming and economic uncertainty once again dogging the country, forum members must keep a conservative outlook when they meet in December to discuss future projections. And tax hikes should be out of the question during the next legislative session.
Gov. Steve Sisolak pledged during his February State of the State speech not to raise taxes. “Since I’ve been governor, we haven’t raised one penny of new taxes on the people of Nevada,” he said, “not one penny, and that’s also true of every proposal I’m offering tonight — no new taxes, no new taxes.”
Yet, he will face relentless pressure from his own party to do the opposite if he wins re-election in November, particularly if Democrats maintain legislative control. And it’s not encouraging that his comments about his tax record are pure fantasy: Gov. Sisolak signed a mining tax increase in 2021 and also sanctioned two other tax hikes that the Nevada Supreme Court later ruled were passed illegally.
It’s worth remembering that the last two major tax increases in Nevada history sailed through the Legislature under term-limited governors who had nothing to fear from the voters. A three-peat in 2023 would be an atrocity at a time when the state is awash in federal money and swimming in unanticipated tax collections. Nevadans battered by President Joe Biden’s misguided economic policies can’t afford it.