State faces largest budget deficit in U.S.

CARSON CITY-- Nevada faces the largest budget deficit in the country for the upcoming fiscal year, according to a recent survey of states by the Center for Budget and Policy Priorities, a liberal Washington, D.C., think tank.

Nevada will have a 30 percent gap between spending and revenue, edging out Arizona, which faces a 29.8 percent deficit, according to the survey.

The gap is calculated by comparing expected revenue to the sums that states see as necessary to maintain current state services.

Many states are facing budget cuts and considering raising taxes to fill similar budget gaps. But economists and lawmakers say Nevada's dubious distinction reflects its reliance on sales and gambling taxes and its dependence on tourism.

Elliott Parker, a University of Nevada, Reno, economics professor, said that with Americans saving more, "people are cutting back on vacations, their gambling and their durable purchases, and that hurts Nevada more than other states since our tax base is so unbalanced."

Joe Edson of the Progressive Leadership Alliance of Nevada said the state has long needed a broader-based tax system to prevent deep cuts in services during economic downturns. He said the state lets most businesses off without paying taxes as they do in other states.

Assembly Speaker Barbara Buckley said she won't support a corporate income tax, one of the frequently mentioned ways to broaden the tax base. Rather, she said, the size of the deficit highlights the need to diversify the economy.

Assistant Majority Leader Marcus Conklin, D-Las Vegas, who co-authored a report on Nevada's tax system last year, said gambling and sales taxes during good times make up 65 percent of state revenue.

Many necessary items, such as groceries, are exempted from the sales tax.

The exemptions and reliance on gambling have made the state depend on discretionary spending, he said.