(The Center Square) – Amidst economic issues, Nevada lawmakers have announced a $191 million shortfall for the state’s upcoming two-year budget.
In a blow to the Nevada’s 2025-27 budget, the state Economic Forum panel placed revenue at roughly $12.2 billion over the next two years, down from $12.4 billion. The near $191 million gap, which was predicted last Thursday, not only means less funds for state programs, but will likely require a budget recalculation.
“Complete chaos, uncertainty,” Nicole Cannnizzaro, Democratic majority leader of the state Senate, said at a press conference. “It is making markets drop. It is making people have less confidence, and when that happens, Nevada is one of the first and hardest states hit.”
The Economic Forum panel is made up of five independent private sector economists. They first estimated state revenue in December when they projected the $12.4 billion used in the current budget.
Gov. Joe Lombardo’s January draft of the budget had also started over-budget from the Economic Forum’s original projection – by about $335 million.
But the recent estimated revenue decrease is more abnormal. The last time the Economic Forum decreased the anticipated revenue mid-session like this was in the wake of the 2008 Great Recession in 2009.
The change comes from the anticipated increase in prices from President Donald Trump’s tariffs, largely those aimed at China as part of the administration’s “trade war.” The state’s poor revenues are expected to see major impacts.
“We have a rough rule of thumb that every percentage point increase in the effective tariff rate reduces GDP by six to seven basis points over the coming year,” said Emily Mandel, the associate director and senior economist for Moody’s Analytics. “If you do the math on that 19% increase, it would reduce GDP by 1% to 1.5% over the subsequent year.”
But this reduction was anticipated by the state’s fiscal committees. Ahead of the revenue announcement, they had already slashed several of Lombardo’s proposed new positions and programs – although only about $130 million worth.
A large portion of the Economic Forum’s projected losses comes from the state’s payroll, commerce and sales taxes, all partially attributed by the Economic Forum to Trump’s tariff and economic policies.
Nevada is one of only eight states with no income tax, but with the Silver State already ranked down at 34 in general state affordability rankings, an income tax is likely not on the table.
After the last biennium budget, Nevada was left with a large “Rainy Day Fund” of $1.2 billion.
The Legislature is now tasked with finding a solution to the budget deficit. If no deal is reached, a special session will be called over the summer to balance the state’s plans.
