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Background on the Economic Forum
The Economic Forum was created by the Legislature during the 1993 Legislative Session. This group is responsible for providing forecasts of the state’s General Fund revenues for each biennium budget period. The Economic Forum consists of five appointed members who cannot be employees of state government, including publicly supported institutions of higher education. The Governor appoints all five members to the Economic Forum, with the Senate Majority Leader and the Speaker of the Assembly each nominating one member for appointment. Each member appointed to the Economic Forum serves a two-year term.
By statute, the Economic Forum is required to provide revenue forecasts on or before December 3 in even-numbered years and on or before May 1 in odd-numbered years. The December 3 estimates are used by the Governor in preparing the budget recommendations that will be presented to the Legislature in January. The May 1 forecast is the final official revenue estimate that must be used by the Legislature in balancing General Fund appropriations with anticipated General Fund revenues for the next biennium.
The Technical Advisory Committee on Future State Revenues provides technical support to the Economic Forum. This committee was also created by the 1993 legislation. By statute, this committee consists of the following members or their designees: Senate Fiscal Analyst; Assembly Fiscal Analyst; Chief of the Budget Division of the Department of Administration; Chief of the Bureau of Research and Analysis within the Department of Employment, Training, and Rehabilitation; the Vice-Chancellor for Finance of the University and Community College System of Nevada; the State Demographer; and the Chairman of the Committee on Local Government Finance. This committee meets as needed or requested by the Economic Forum to produce informational reports or forecasts for the Economic Forum and prepare for the actual meetings of the Economic Forum.
The first budget and legislative period that the Economic Forum was required to provide forecasts was the 1995-1997 biennium. Thus, General Fund revenue forecasts had to be produced by December 1, 1994, for FY 1995 (the current fiscal year), FY 1996, and FY 1997. After producing a forecast for the current fiscal year or base year, a one-year ahead forecast is prepared for the first year of the ensuing biennium and a two-year ahead forecast is created for the second year of the biennium. An updated or revised forecast had to be prepared by May 1, 1995. The forecast periods are the same for the May 1 forecast, except that more current information is available for the base or current fiscal year period.
In a typical forecast meeting, the Economic Forum actually reviews the individual forecasts prepared by various state government staff for seven of the state’s major revenue sources: sales and use tax, percentage fee tax on gaming revenues, insurance premium tax, modified business tax, cigarette tax, live entertainment tax and real property transfer tax. For each of these revenue sources, the Economic Forum is presented with separate forecasts prepared by Fiscal Analysis Division staff, Budget Division staff, and staff from the specific agencies responsible for collecting each of these revenues. The state also contracts with a national forecasting firm, GLOBAL INSIGHT, to produce forecasts for the sales and use tax and percentage fee tax, which are considered by the Economic Forum. The members of the Economic Forum arrive at a consensus forecast for each of these major revenue sources after reviewing and discussing the separate forecasts made available to them.
Forecasts for the remaining General Fund revenue sources are prepared by the Technical Advisory Committee. Technical Advisory Committee member’s staff, as well as other state agency staff, prepares forecasts of these smaller revenue sources. The Technical Advisory Committee then produces a consensus estimate of these revenue sources, which are presented to and reviewed by the Economic Forum. After reviewing the forecasts, the Economic Forum can make adjustments to the forecast for any of these minor revenue sources, if desired, before final approval. The forecasts for these other General Fund revenue sources have been produced using this process at the direction of the Economic Forum.
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