Development Of Next State Budget Under Way

CARSON CITY – Nevada state agencies and public education have submitted budgets calling for nearly $8 billion in spending for the upcoming two years, about $3 billion more than what is expected to be available with current tax revenues.

State Budget Director Andrew Clinger said the gap will exist in large part because of the expiration of temporary tax increases approved by the 2009 Legislature, the loss of one-time federal stimulus funds and some increased caseloads, particularly for Medicaid.

The spending plans submitted by state agencies and education by a Sept. 1 deadline assume that the current furlough program and merit pay freezes will not be continued when the new budget takes effect on July 1, 2011. If the governor and Legislature decide to continue the pay freezes and one-day-a-month furloughs, the nearly $8 billion in spending would be reduced by about $480 million.

That still leaves about a $2.5 billion gap in anticipated tax revenue and potential agency spending, Clinger said.

About $1 billion of the gap is related to taxes that will expire on July 1, 2011 unless extended by the Legislature. Lawmakers in 2009 increased the sales tax and the modified business tax on the state’s largest employers to balance the current budget. Car registration fees were also increased.

The American Recovery and Reinvestment Act funds that will not be part of the next budget total nearly $600 million, Clinger said. So the loss of the temporary tax increases and federal stimulus funds contribute about $1.6 billion of the $3 billion difference between anticipated revenues and spending, he said.

The remainder of the difference has not been completely analyzed yet, but much of it is due to seeing more people becoming eligible for Medicaid, which will require an increase in state general fund spending, Clinger said. Medicaid provides health care for low income people, many of them children and the elderly. The costs are shared by the federal government and the state.

Caseload growth in Medicaid and related programs is expected to require $150 million in new spending over the life of the new two-year budget.

If the spending level for the 2011-13 general fund budget ends up at $7.5 billion because furloughs are extended, it would be an increase of about $1 billion over the current two-year budget where spending is expected to total $6.5 billion by June 30, 2011, Clinger said.

But those numbers don’t paint a full picture, he said. The nearly $600 million in lost federal stimulus funds will have to be made up with general fund revenue in the next budget, so that is a major factor in the increase.

But there are some actual proposed spending increases in the new budget, particularly the $150 million in increased Medicaid spending, Clinger said.

“It is going to be important that we outline how you get from $6.5 (billion) to the $8 (billion),” he said. “I haven’t gone through the process of comparing the current $6.5 billion to the $8 billion to sort of give you a reconciliation of that but that is one of the things we will do.”

A number of legislative leaders have already said taxes have to be on the table as a potential solution to the budget shortfall, but both leading party candidates for governor have rejected the idea of new or increased taxes to bridge the gap between revenue and spending.

Assembly Majority Leader John Oceguera, D-Las Vegas, said he believes lawmakers must first look to find efficiencies and implement reforms where possible. After that process is completed, there will likely still be a gap between revenues and what is needed to fund the operations of state government for the next two years, he said.

“But I think we ought to work on the checkbook side of things first, on what we’re spending money on,” Oceguera said.

The amount or revenue available to fund state programs and services won’t be known for certain until after the Economic Forum meets in December. The group’s projections must be used by lawmakers in adopting a balanced budget.

Clinger’s office has also embarked on a review of the programs being offered by state government with an eye to identifying the core services that must be provided. Programs that do not meet the priority criteria would then be on the table for potential cuts or even complete elimination as part of the budget balancing process.

The Legislature has also created a committee to perform a fundamental review of some state agency budgets with an eye towards finding savings and efficiencies. The panel meets again on Wednesday.


Audio clips:

Budget Director Andrew Clinger says the proposed state spending levels will have to be reconciled with the current budget:

090910Clinger1 :11 we will do.”

Clinger says the potential of $1.5 billion more in spending in the next budget must be explained:

090910Clinger2 :23 to the $8.”

Assembly Majority Leader John Oceguera says Legislature must first look to efficiencies in state government before considering new revenues:

090910Oceguera :30 spending money on.”

  • http://nevadnewsbureau michael

    PEOPLE; there is ONLY 1 fair and honest solution; bankruptcy,,, we are 3 times more bankrupt than Orange County (they filed) we have the same population.
    BECAUSE the unions have got wh0re politicians to make the law so the politicians can say “there is nothing we can do about the union contracts” of course they wrote the laws.
    Metro cops=$175K
    N.Y. cops==55K but they only need 41K for “same standard of living” SO, hire them and give them a big raise by paying them 55K
    EXACT same story for fire dept.

    YOU MUST admit we are broke, declare bankruptcy ; fire all so there is no discrimination; IMMEDIATLY re-hire any who wish to work for the “new deal” they get paid what their bosses the taxpayers earn in private sector and NOT a penny more.
    IT IS IMMORAL to put this albatross around your kids and grand kid’s necks!!
    You must DEMAND, as the politicians have betrayed you. They are traitors to the constituents and wh0res to public unions. The happily steal from a 20K waitress with no benefits and hand it over to 250K ff, cops, etc. AND AFTER you pay down the road for these cops and ff retirement included you will have paid $1,500.00 per 8 hr. shift for these future millionaires.

  • http://nevadnewsbureau michael

    HEY TEACHERS, be part of the solution or you watch as the fire fighters and cops and others who make 200%, 300%, 400% of the national average INSIST that you share the same % cuts. Only you already work for the national average. STAND UP as a group or get whized on while being told it is warm water from heaven.
    REMEMBER there is only so much money and we are the worst shape of any state in the U.S.
    You think California is worse, you haven’t done your homework. Here is a tip; GET A CLUE

  • Anonymous

    Wow, I am surprised over the lack of knowledge that has been displayed. First of all, state workers do not have any rights as far as pay rates go. That is the City and County employees who have Unions. They have not paid into our Benefits Programs and once they retire, they get to come into PEBP. Maybe we should look at that practice. Second, if you are a waitress it is because you do not have the education to achieve higher. I would suggest that you go to school and get an education. I worked full time and went to school full time as well as raised my daughter without any Welfare.

    Most of your LEO have College Degrees and paid for them themselves. As for Firefighters, they make bank off of the overtime and that needs to be reigned in.

    There are many state agencies that are funded through the Federal Government that does not take any funding from the General Fund. The General Fund dollars go to mainly WELFARE and Education. I say do away with Welfare and Education and you can take care of yourselves and educate your own children.