Slowdown in sales tax growth hurts Nevada schools

New state projections show the taxes, designated for public schools, are coming in $38.2 million short of projections for fiscal 1998, and the deficit could be more depending on actual tax revenues. Nevada law requires that such shortages be covered from other state funds.

"Where will it come from? I'm not sure," said Doug Thunder, deputy superintendent for administrative and fiscal services for the Department of Education.

He added a likely source would be a "rainy day" reserve fund expanded in 1995 to provide money in fiscal emergencies.

Thunder said the amount of the bailout depends on several factors, including actual sales tax growth in the current fiscal year that began July 1, and fall enrollment figures.

Thunder said the $38.2 million shortfall could increase by as much as $10 million because schools already borrowed $10 million from the 1999 fiscal budget to cover 1998 shortfalls.

On the positive side, school enrollments may be lower than projected, saving as much as $19 million and reducing the bailout by that same amount, Thunder said.

Enrollment for the coming school year originally was projected at 305,764 students. More recent data from the school districts suggests the number will be closer to 300,000. An official count won't be made until fall.

Senate Finance Chairman Bill Raggio, R-Reno, said talk of a bailout is premature, given that many of the variables are unknown.

"But I don't think such an appropriation would pose a major problem," he said. "We have a cushion in the budget."

The last time a supplemental appropriation was required was in 1993, when $51 million was provided from the state to the school districts to make up a shortfall in the local school support tax.

Finding the money to make the special appropriation may be difficult this time around because state tax collections are not coming in as projected either.

The projected growth for all the different taxes were made last year by the Economic Forum, an independent panel with financial and accounting expertise that sets estimates to be used by the governor and Legislature in passing a balanced budget.

Michael Pitlock, executive director of the Department of Taxation, said sales taxes were expected to grow by more than 8 percent in both years of the current budget cycle. But he said sales taxes in fiscal 1998 will come in at about 4 percent.

Gambling tax projections also are below the mark, with revenue growth of 3.2 percent in fiscal 1998 instead of the projected 6.8 percent.

These two taxes make up 72.5 percent of the state general fund budget, so shortfalls in estimates can have major impacts on state spending.

But Pitlock said the effect on the budget of these revenue shortfalls shouldn't be too severe this time around because there has been a comparable reduction in growth in a number of areas, including the school enrollments.

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