he Nevada Economic Forum met Thursday to review revenue forecasts and sent them to Nevada's governor and state lawmakers suggesting that it could be years before state tax revenue rebounds to pre-pandemic levels.
The forecasts from the panel of five government-appointed analysts have changed very little during their fourth meeting this year, amid mixed economic news in the past few months, KLAS reports. Gaming wins at Las Vegas casinos in October indicate casinos are doing much better, and news of the vaccine could mean cause for optimism. But at the same time, some resorts have closed midweek as tourism demand is slow to catch up, and occupancy limits reduce the profits that are possible for hotels.
The panel approved forecasts that project the economic impact will outlast the virus and shrink tax revenue through the next two-year budget cycle until 2023, the Associated Press reports.
Among the factors playing into recovering revenue are gaming revenues, revenue from live entertainment and sales tax revenues. Revenue from retail sales has exceeded expectations. The absence of conventions and big events — like New Year’s Eve fireworks — is weighing heavily on the economy and forcing lower expectations of a speedy recovery.
The shortfalls are expected to be less than they were in the 2020 budget year. Linda Rosenthal, the panel's vice chair, said that Las Vegas had been hit harder than the rest of the country but noted casinos in regions that depend less on fly-in traffic haven't seen parallel drops in demand. “The minute we get the vaccine disseminated and we get travel back — like I said, the demand for gaming has proven to be there — so I feel very comfortable with seeing those numbers bounce back to pre-pandemic levels and even above,” she said.
With the number of visitors down to levels not seen since 1993, concerts and conventions cancelled and hotel rooms sitting empty, Nevada has been among the hardest hit economically by the virus and restrictions put in place to contain it. Since June, gaming revenue is down $1.4 billion — 27 percent. And the forecast for fiscal year 2021 is $8.7 blllion, down more than 11 percent. Locals playing slot machines have driven much of the recovery in casinos, but the absence of travelers has limited the table game wins.
The forum's forecasts project the state will collect $8.5 billion in general fund revenue over two years, down 5% from the $8.85 billion they projected for 2019-2021. It projects that neither gaming fees nor sales and use taxes will recover to pre-pandemic levels until the 2023 budget year. Analysts stressed that the projections were little more than guesses given the difficulty of anticipating the pandemic's trajectory, especially with a vaccine on the way.
Regardless, the forecasts will serve as a starting point for state lawmakers tasked with re-balancing the state budget. Decisions over whether to slash funding for schools, roads or Medicaid recipients, or to furlough state workers, could depend on congressional relief and provisions like the $1,200 stimulus checks issued in March, which buoyed consumer demand and benefited places like Las Vegas, said Hayley Owens, an economist with the Nevada Department of Taxation.
“Today’s Economic Forum report is a sober reminder of the devastating impacts COVID-19 has caused in our state,” Gov. Steve Sisolak said. “This global pandemic has created both a fiscal and economic crisis in our state, and my office, the Governor’s Finance Office and state agencies will continue the challenging task of preparing an Executive Budget based on our new fiscal reality with the goal of preserving vital services as we plan for a post-COVID future.”
“Once the Legislative Session begins, I look forward to working with Nevada lawmakers on finalizing the budget,” Sisolak said. He added that the state is not alone in facing revenue gaps, and the federal government needs to help with additional stimulus money.
The forecasts are important to setting state budgets and spending levels, which have been severely affected by the COVID-19 pandemic.