Nevada's next two-year budget could have at least $1 billion more to spend, new state revenue estimates show

What happened

Nevada's governor and lawmakers could have at least $1 billion more to work with in the next two-year budget than in the one approved previously, according to estimates presented Wednesday and reported by The Nevada Independent. The outlet reported that the state's actual revenue so far has come in well above expectations, even though economists took a cautious approach when building the current budget.

The projections point to steady revenue growth despite worries about a recession tied to tariffs and a decline in visitors to Las Vegas, the Independent reported. The story appeared in The Nevada Independent en Español, which said an editor translated it with help from a generative AI tool.

How the budget number gets set

The Economic Forum's role

The state's Economic Forum is a panel of five private-sector economists required by law to determine how much money the next two-year budget will have. The group met last week to work through revenue estimates and will use them to set the budget's size next month, according to the Independent. That figure can still change at the end of March as more economic data comes in.

The amount the Forum approves will be the basis for the governor's budget proposal, which is due in January. The Forum made no final budget decisions last week, but it did approve another entity's estimates for smaller revenue sources. Those projections showed a decline from the current cycle, mostly because of lower revenue from unclaimed property and cigarette taxes.

A range of possible totals

Depending on which projections are chosen, lawmakers could have between $900 million and $1.64 billion more for the next two-year budget, the Independent reported. Two years ago, the starting budget was almost $1 billion larger than the one before it.

Where the growth is coming from

Sales and use taxes

Experts projected steady growth last week in many of the state's main revenue sources. The biggest highlight was sales and use tax revenue, which makes up almost 30 percent of the general fund's annual revenue, though analysts differed on how much it would grow.

In the fiscal year that ended in June, sales and use tax revenue came in almost $113 million above forecasts, but about a quarter of that came from anomalies in tax collection processes, the outlet reported. Hayley Owens, an economist with the Legislative Counsel Bureau, told the Independent the result surprised everyone. She said smaller sectors such as manufacturing and data centers drove much of the growth, and that while this may reflect a diversified economy, those sectors are also less stable.

Higher prices play a part

Economists noted that some of the revenue growth comes from inflation and rising insurance premiums, meaning part of the extra money comes directly from Nevadans' pockets. Kumael Bilgrami, an economist at Moody's Analytics, agreed with a Forum member's view that nearly 90 percent of sales tax growth is due to higher prices for goods. Bilgrami said he expects sales tax collections to keep rising, but that weak tourism and cost pressures on consumers will limit those gains.

The economic backdrop

The Independent described Nevada's economic picture as uneven. Tourism is still declining, while job growth is on solid ground. Rising costs continue to squeeze Nevadans and make travel to the state less likely, while a wealthier visitor base in Las Vegas is providing some cushion.

Economists expect some trends, including rising gas prices and the drop in Las Vegas tourism, to ease during the next budget cycle. High-profile sporting events are also expected to lift revenue. Through early 2029, Las Vegas will host the college football championship, the men's basketball Final Four and the Super Bowl.

What it means for the next governor

The 2025 session was tighter. Lawmakers worked through budget adjustments amid a more complicated economic outlook, and it was the first time since 2009 that available money shrank in the middle of a session. Lombardo's initial 2025 budget proposal had a $335 million deficit, according to the Independent.

In the governor's race, Democratic Attorney General Aaron Ford has proposed several policies that would require funding. Republican Gov. Joe Lombardo has given fewer details about legislation he would support in a possible second term. Both candidates have pledged not to raise taxes, the outlet reported.

What to watch next

• The Economic Forum is set to decide the size of the next two-year budget next month.
• The governor's budget proposal, based on the Forum's figure, is due in January.
• The Forum's number could change at the end of March as more economic data becomes available.
• Lawmakers and the governor will build the budget during next year's legislative session.