Despite fears of an economic slowdown over tariffs and declining visitation to Las Vegas, Nevada is expected to see steady revenue growth across its next two-year budget cycle.

The money available to Nevada's governor and Legislature in crafting the next two-year budget will be much more than the previously approved budget, with an increase of at least $1 billion possible according to forecasts presented Wednesday. While creating that budget, economists took a cautious approach, but actual state revenues so far have significantly exceeded expectations.

The state's Economic Forum, a panel of five private-sector economists tasked under state law with determining the size of the next two-year budget, met Wednesday to hear revenue forecasts. It will use these forecasts to finalize the size of the forthcoming budget next month. This number can also change at the end of March as more economic data becomes available.

The forecasts are likely to be welcome news for the Legislature and governor, though economists noted some reasons for revenue growth are inflation and higher insurance premiums. It's a sign that although state officials will have more money at their disposal, it in part comes from Nevadans' pocketbooks.

Although the Forum did not make any final budget decisions Wednesday, it did approve another body's projections for minor revenue sources. These projections marked a decrease from the ongoing budget cycle, driven in large part by decreases in revenue from unclaimed property and cigarette taxes.

The budget size that the forum approves next month will be the basis for the governor's recommended budget, which is due in January. Attorney General Aaron Ford (D), who is running for governor, has proposed many policies that would likely require a price tag. Incumbent Joe Lombardo (R) has provided fewer specifics about legislation he supports in a potential second term, though both candidates have pledged to not raise taxes.

In 2025, Lombardo's initial budget proposal had a deficit of $335 million.

Budget size

During the 2025 legislative session, lawmakers were in a budget crunch amid broader economic concerns. It was the first time since 2009 that money available decreased mid-session.

During next year's session, the governor and lawmakers will likely have much more money to work with. After general fund revenues grew by about 7.5 percent in the 2026 fiscal year, forecasters expect it to slow slightly in the ongoing fiscal year before going up in time for the next budget cycle.

Depending on the chosen forecasts, lawmakers could have between $900 million and $1.64 billion more for the next two-year budget. Two years ago, the initial budget was about $1 billion bigger than the year before.

Economic forecasts

It's all happening against a backdrop of an uneven economic picture in Nevada. The state continues to struggle with declines in tourism, though its job growth is on "solid ground," according to a presentation Wednesday from economic research firm Moody's Analytics. Increased costs are also continuing to strain Nevadans — and making travel to the Silver State less likely — while a wealthier visitor base in Las Vegas is providing some economic cushion. 

At the same time, economists also expected some trends, such as the rise in gas prices and decline in Las Vegas tourism, to subside in the next budget cycle. The state is also likely to see surges in revenue across the next few years because of high-profile sporting events. Through early 2029, Las Vegas will host the college football championship, men's college basketball Final Four and Super Bowl.

In presentations at Wednesday's meeting, forecasters expected steady growth among many of the state's major revenue sources. Most notably, the projections expected growth in revenue from the sales and use taxes, which make up about 30 percent of annual general fund revenues, though the size of that growth differed among forecasters.

It comes after the state's sales and use tax revenue significantly exceeded expectations for the fiscal year that ended in June. Revenues were about $113 million higher than the forecast, but about a quarter of that was because of certain anomalies in tax collection processes.

"That one surprised us all," said Hayley Owens, an economist with the Nevada Legislative Counsel Bureau.

Growth was driven in large part by smaller sectors, such as the manufacturing and data center industries. Owens added although this could indicate the benefits of a diversified economy, these industries are also more volatile.

Moving forward, there will likely be continued growth in sales tax revenues. Kumael Bilgrami, an economist with Moody's Analytics, agreed with an Economic Forum member's interpretation that about 90 percent of this growth is attributable to the cost of goods.

Bilgrami added that the extent of the revenue growth has a ceiling

"We would expect that sales tax collections will continue growing, but weak tourism and cost pressures on consumers will keep a lid on those gains," he said.