Nevada Struck Gold? The Inflation Problem Behind the Surplus

Nevada collected $1.92 billion in sales tax last fiscal year, up about 8.5% and $113 million more than the state's own forecasters expected. Headlines say Nevada struck gold with a $1 billion surplus. So why did private sector pay fall 0.6% once inflation is factored in? On this episode of Everyday Economics, Center Square publisher Chris Krug and chief economist Dr. Orphe Divounguy explain how states can collect more dollars without becoming any richer. Dr. O breaks down the difference between nominal and real dollars, and why the same rising prices that boost sales tax collections also raise what the state pays for workers, construction, medical care, and contracts. They also look at why the $1 billion surplus is a preliminary two-year forecast ranging from $900 million to $1.64 billion, why Dr. O says now is the time for states to save rather than spend, who comes out behind in a K-shaped economy, and why Nevada's dependence on tourism and gaming could be a risk going forward. Read Dr. O's Everyday Economics column every Monday at The Center Square, and subscribe to his newsletter, Markets Measured. #Nevada #Economy #Inflation #StateBudget #Taxes #KShapedEconomy #EverydayEconomics #TheCenterSquare