Insurance tax helps state revenue exceed projections
Nevada's tax on insurance premiums is the nation's second highest. (Photo: Ronda Churchill/Nevada Current)
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Nevada’s general fund revenue is 5% higher so far in fiscal year 2024 than earlier forecasts from the state’s Economic Forum, Legislative fiscal analyst Michael Nakamoto told legislators Monday.
Nakamoto told the Joint Standing Committee on Revenue the state’s general fund, projected year-to-date at $3.7 billion, is up approximately $64.1 million from two months ago, and $159.7 million more than forecasted by the Economic Forum, a panel of experts that provides forecasts used by the governor to plan his budget.
Nakamoto cited three revenue sources responsible for the current numbers.
The state tax on insurance premiums, generating approximately $22.5 million above the forecast for the first two quarters of the fiscal year, Nakamoto said.
Auto insurance rates are rising nationally — in the last year alone auto insurance increased by 18.9%, according to the U.S. Bureau of Labor Statistics.
According to the National Association of Insurance Commissioners, the only state with a higher insurance premium tax rate than Nevada’s 3.5% is Hawaii, at a little more than 4%. The tax on insurance premiums in the overwhelming majority of the rest of the states is closer to 2%, and often less.
In Nevada, the tax on insurance premiums is the fourth largest source of state general fund revenue.
The modified business tax, a 1.17% levy on wages over $50,000, after the cost of health benefits are deducted, generated $21.3 million more than forecasted.
Interest income generated by the Treasurer’s office was $116.6 million through March, compared with $41.5 million a year ago.
“It’s a good environment for what we do from a rate perspective and our investment team is doing a great job. The investment team is four people and me,” Treasurer Zach Conine told the Current via email. “We have now generated more in investment returns in the last five years than since the formation of the state.”
Sales and use taxes tempered the increase, coming in $29.5 million less in the first seven months of the fiscal year than forecasted.
Other general fund revenue is approximately $80.8 million above the forecast, Nakomoto said, crediting in part a fine imposed by gaming regulators.
“Back in July, the Gaming Control Board levied a $10 million fine against Steve Wynn that we were not accounting for in the forecast,” Nakamoto said. “So that number is going to stay at about $10 million above the forecast for the entire fiscal year, barring any other penalties that may be imposed by the board.”
The Economic Forum, which last met in December 2023, will meet again on June 10.
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