LAS VEGAS (KTNV) — A report prepared for Nevada's economic forum puts the blame for a drop in projected state revenue at the feet of President Donald Trump's tariff policy.
The report, by Moody's Analytics, says the national economy will avoid a recession, but only if Trump changes course with most of the tariffs he's imposed since being sworn in on Jan. 20.
VIDEO: Steve Sebelius breaks down Nevada's Economic Forum, revenue projected to drop $191 million
"However, sharp policy shifts by the Trump administration, including a mounting global trade war and Department of Government Efficiency cuts to federal jobs and spending have created unprecedented uncertainty and are weighing on consumer and business confidence," the report says. "More restrictive immigration measures are another cornerstone of the administration's policy, and while the stepped-up deportation of immigrants has yet to significantly intensify this poses a substantial headwind to labor force growth."
The report sums: "We expect the national economy to narrowly skirt a recession. However, this is predicated on the expectation that the president will ease up on tariffs and unwind all but those imposed on China by the summer of 2026."
That report, along with historic tax data and other material, led the Economic Forum on Thursday to downgrade the state's estimated two-year revenue projections by $191 million, or 1.6%, leaving Nevada's general-fund budget at $12.2 billion.
And while that's a fairly big number for any organization, government finance expert Guy Hobbs said it could have been worse.
"It's hard to say something like this about numbers that are negative, but I think it could have been worse than that. And I think there were some people that were expecting it to be quite a bit worse," Hobbs said. "I think there are a lot of folks, I talked to three or four people that have feelings about these numbers and almost all of them had a higher negative number than what it actually came in at."
Still, the Legislature is bound by law to follow the Economic Forum's projections when building the state's final budget, which must be approved by June 2, just about a month from now.
That means cuts to all sorts of spending bills, and may doom other bills with large price tags. That includes Assemblywoman Sandra Jauregui's bill to provide transferable tax credits to lure Hollywood studios to build facilities in Las Vegas and shoot movies here. That bill would not spend money in the current biennium, but would cost $1.6 billion over 15 years if passed.
Not only that, but Gov. Joe Lombardo has bills that would spend money, including $250 million to build affordable homes around the state.
In addition, potential cuts to federal funding could have big effects on the state, especially if funding is cut to Nevada's Medicaid program. The state receives nearly $15 billion from the federal government in its entire state budget, the vast majority of which goes to Medicaid.
The Economic Forum found that revenue from sales taxes, the payroll tax and the commerce tax on business revenue were all projected to dip. That's in part due to the uncertainty over the economy brought on by tariffs and their effects.
Hobbs said uncertainty can't help but have an effect on financial forecasts.
"Anything that creates uncertainty around the time you're making predictions will naturally cause you to be more conservative about them, not optimistic until all of those things clarify," he said. "Uncertainty rarely leads to a more optimistic outlook. It rarely does. If you're looking at things like fiscal data, it certainly does not. ... The more uncertainty, the more you feel that you have to accommodate that uncertainty and the projections that you're making."
