Governor Estimates $656 Million Lost In Budget Due To Supreme Court Decision

CARSON CITY — The state’s budget just took a $656 million hit, according to members of Gov. Brian Sandoval’s staff.

Following a Supreme Court decision earlier today, the governor convened the press at 11 p.m. to outline his opinion of how the decision effects funding streams used in the state budget.

“The problem is much worse than we thought,” said Dale Erquiaga, the governor’s senior adviser.

Erquiaga, Andrew Clinger and Lucas Folleta, the governor’s budget director and legal counsel respectively, would not speculate as to how they will replace the dollars they assume are lost in the state’s proposed two-year budget.

This morning, the court ruled in the Clean Water Coalition case that the state government could not take $62 million in local revenues to bolster the state budget.

Later this afternoon, Sandoval said he believed the case could have wide-reaching implications for his proposed general fund budget.

“The ruling raises questions about certain assumptions in the proposed executive budget, despite some having been used in the past,” he said in a statement. “As a former federal judge, I am cognizant of the legal issues.  As governor, I am forced to deal with their ramifications and I am responding by reworking the state budget.  I will announce a revised plan on Friday.”

Erquiaga said that the governor has kept legislative leaders appraised of the situation.

Erquiaga also said the governor and his staff plan to work throughout the night to find a solution to replace the lost revenue.

The governor, however, has already announced that he is considering extending taxes that are set to expire June 30. Doing so would bring the state an estimated $712 million, enough to offset the reductions due to the court decision.

In addition to the $62 million, the governor is assuming $594 million in lost revenue.

“The court’s decision forced us with this decision,” Folleta said.

The decision holds that the state cannot siphon money from a local funding stream, thus making the Clean Water Coalition money grab unconstitutional.

The governor’s staff spent the late afternoon and evening evaluating where the money in Sandoval’s budget is coming from and arrived at a “conservative” decision that the court’s ruling could endanger five other revenue sources.

“To take a less conservative approach, if the state were sued, revenue streams will have to be backed out,” Erquiaga said.

In addition to the $62 million lost due to the court’s decision, the governor’s office assumes these revenue sources would be lost if challenged in court:

  • Supplemental account for medical assistance to indigents: $38,427,584
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  • Transfer from school districts’ debt service reserves: $247,420,312
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  • 4 cent Clark and Washoe counties operating property tax: $52,994,482
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  • 2.6 cents in fiscal year 2012 and 2 cents in fiscal year 2013 in Clark and Washoe counties capital projects property tax rate: $30,475,264
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  • Room tax dollars: $225,455,400
  • Ericboyer

    Best news of the session– sad that a former federal judge couldn’t see how wrong he was to cravenly attempt to snatch local funds, and make the counties the bad guys. Now perhaps we can keep sheriffs deputies on patrol, keep the jail open, and with a little extra revenue, not abandon the poor, the disabled, and the teachers.