Posts Tagged ‘budget shortfall’

State Lawmakers Call For Review Of 20-Year Solar Contract

By Sean Whaley | 5:01 pm April 24th, 2012

CARSON CITY – State lawmakers today approved $46,284 from a legislative contingency fund to help the Nevada Office of the Military cover a budget shortfall due to high energy costs resulting from a solar project built at three of its sites around the state.

But lawmakers also asked for an attorney general review of the 20-year deal with Sierra Solar to see if the 15 cent per kilowatt hour charge for the electricity can be modified. The rate is now higher than what the agency could get buying power directly from NV Energy.

The contract was entered into in December of 2010, before Gov. Brian Sandoval began his term.

Photo by Fernando Tomás via Wikimedia Commons.

Jennifer McEntee, administrative services officer for the agency, said the energy costs to the state are higher at the three sites because the facilities receive more state general fund support than other facilities operated by the agency. The budget shortfall is the result of this higher state share of the energy costs, she said.

State Budget Director Jeff Mohlenkamp told lawmakers, meeting as the Interim Finance Committee, that future solar projects will not go forward without a guarantee that they will be at least cost neutral to the state.

“I do think that there is still some really good opportunities for solar, however it really has to be dialed in in order for it to pencil out,” he said.

Keys to successful projects are obtaining both federal tax credits and rebates from NV Energy, Mohlenkamp said.

Lt. Col. Rick Blower said when the contract was approved, electricity rates were expected to rise. Rates have come down instead, however. But it is yet to be determined if the 20-year contract is a bad deal for the state, he said.

Sen. Steven Horsford, D-Las Vegas, asked if there is an opportunity to renegotiate the contract.

Mohlenkamp said any such effort would be difficult, given the investment by the company in the equipment at the three facilities.

Horsford asked that the attorney general’s office review the agreement anyway.

“It’s not that the technology or the approach on renewables is the problem, it’s the fact that someone negotiated a bad deal on behalf of this department,” he said. “We can’t pay for something at a higher rate per kilowatt hour than what we can get in the market from other competing resources.”


Audio clips:

State Budget Director Jeff Mohlenkamp says the state will be careful moving forward with solar projects to ensure they are at least cost neutral:

042412Mohlenkamp1 :10 normal commercial terms.”

Mohlenkamp says some solar projects are expected to be worth pursuing:

042412Mohlenkamp2 :08 to pencil out.”

Sen. Steven Horsford says the issue is someone negotiated a bad deal:

042412Horsford1 :25 of this department.”

Horsford says an attorney general review of the contract is needed:

042412Horsford2 :09 other competing resources.”



Lawmakers and Governor Continue to Look for Solutions to Massive Budget Shortfall

By Sean Whaley | 7:16 pm February 18th, 2010

CARSON CITY – As Gov. Jim Gibbons and lawmakers continued to work today toward a plan to balance the state budget, a number of potential solutions were called into question during a hearing today.

Ideas to reduce the deductions available on the net proceeds of minerals tax to raise $50 million, collect as much as $100 million in unpaid taxes owed to the state and expand sales tax collections on internet sales all were questioned by some lawmakers, administration officials and industry representatives.

But new potential solutions were also brought forward at a meeting of the Legislature’s Interim Finance Committee, including a suggestion to make more state agency operations self-sufficient by increasing industry fees, which would free up general fund revenue to reduce the level of cuts now being contemplated for education and state programs.

Another proposal is to establish a new tax amnesty program to bring in additional revenue to offset budget cuts.

Senate Minority Leader Bill Raggio, R-Reno, proposed an auction of state buildings in exchange for a long-term upfront lease agreement fee, saying it could bring in $250 million quickly to help with the shortfall. He said between $200 million and $300 million in cuts proposed by Gibbons to balance the budget are not doable.

Buildings would be appraised and perhaps auctioned off in a single day with the lease agreement fee, calculated over a 20-year period, being paid in full at that time by the successful bidder, he said. The state would then make payments back to the successful bidder during the time of the lease agreement, Raggio said.

“We’re not selling these buildings,” he said. “We would be leasing them out at a fixed amount of payments over a period of time. At the end of the 20-year term, the state would again take back the building.

“It’s not a perfect solution but it is certainly a concept that I think is worthy of at least consideration,” Raggio said.

He noted Arizona recently completed such a process and brought in more than $700 million.

Assembly Minority Leader Heidi Gansert, R-Reno, also supported taking a look at the concept, saying the current budget balancing plan has a lot of holes.

Gibbons and lawmakers are working to come up with a bipartisan solution to an $888 million budget shortfall. Lawmakers are scheduled to begin a special session Tuesday to address the fiscal crisis.

Raggio questioned the suggestions that more tax revenue could be generated by collecting unpaid taxes or by increasing internet sales tax collections. He called some of the budget proposals put forward by different interests as “smoke and mirrors.”

“I’m not going to be part of a process that plugs in something that is unrealistic,” he said.

Dino DiCianno, executive director of the Department of Taxation, said much of the $100 million in taxes owed to the agency cannot be collected because of bankruptcies and other factors. The suggestion was not one of Gibbons’ proposals to balance the budget.

“We will never be able to capture that money,” he said. “Especially with respect to debt that has been discharged by a court. It is truly written off. It is gone.”

Budget Director Andrew Clinger said he has not put a figure on what potentially could be generated from improved internet sales tax collections because there is too high a level of uncertainty surrounding the issue.

And mining industry representatives also testified before the Legislature’s Interim Finance Committee, saying they are willing to help in the current fiscal crisis but that Gibbons’ plan to change the rate of deductions allowed for the minerals tax is a non-starter.

Political consultant Pete Ernaut, representing the Nevada Mining Association, said the industry is willing to help, but Gibbons’ plan to change the deductions on the net proceeds is unacceptable to the industry.

“We understand the number that you all are shooting for, and we’re doing our darn best to get there,” he said.

Assembly Speaker Barbara Buckley, D-Las Vegas, advocated both for a new tax amnesty program and a shift to make more state agencies self sufficient through the use of fees rather than general fund support.

She asked Dennis Neilander, chairman of the Gaming Control Board, if a fee increase of some level could be put in place by July 1 if authorized by the Legislature. The gaming agency received $31.7 million in general fund support in fiscal year 2009.

Neilander said such a timeline could be accommodated. He could not comment on what size of a fee increase would be feasible, noting that the gaming industry is suffering in the current economic slowdown like all other sectors of the economy.

Buckley said such fees should be considered by all regulatory agencies and programs, from the Labor Commissioner to the Equal Rights Commission, to free up general fund money for education and other critical programs.

Gibbons Reassures City and County Officials He Won’t Make Up State Budget Shortfall with Local Funds

By Sean Whaley | 5:33 pm February 1st, 2010

CARSON CITY – Gov. Jim Gibbons said today he will not seek to use local government funds to make up a state budget shortfall that ranges between $900 million and $1 billion.

Gibbons did propose a measure taking some local property tax revenue, four cents per $100 of assessed value, to help balance the state budget in his original 2009-11 spending plan. This was approved by the Legislature as part of the final budget.

But Gibbons said he has no plans to do so again, or look at other local pots of money, in the current budget crisis. The budget shortfall is expected to require a special session of the Legislature later this month or in early March.

Gibbons said he would not seek to touch a $4 billion public works fund in Southern Nevada that has been used to build roads, water improvements and schools.

Las Vegas Oscar Goodman, who attended the meeting in the capital, said he came away reassured that Gibbons has no designs on local tax revenues.

“He made a commitment to us he was not going to bother us if we don’t bother him,” he said.

Asked if the Legislature had the same position, Goodman said: “That’s another story.”

Gibbons said after the meeting it is possible that some cuts would flow to local government entities, but only as a trickle down from state budget reductions. Reducing spending on Medicaid, for example, would mean less Medicaid money flowing to local governments.

This type of local government impact was cited as a concern by Clark County Manager Virginia Valentine during the meeting because of the effect on the University Medical Center, Gibbons said. Valentine participated via videoconference.

Gibbons said he will outline a response to address the shortfall in his state of the state address on Feb. 8. He will also spend time describing just how severe and challenging the shortfall is for the state to deal with.

Gibbons said he is also considering further salary cuts as well as requiring state employees who are not taking furloughs to take the equivalent cut in salary.

Salary cuts don’t raise much money if they are imposed on state workers only, he said. A one percent cut in salary across the board however, including public teachers, would generate $30 million, he said.

But at $900 million, salary cuts alone won’t get the job done, Gibbons said.

“You can’t balance this budget on the back of salary reductions; that is just never going to work,” he said.

Layoffs are also a distinct possibility in the second year of the budget, Gibbons said.

“It may be we are now considering layoffs, very painful layoffs,” he said.

Gibbons said he is also looking again at phasing out the Nevada State Prison in the capital as a way to save money, but said closing Ely State Prison is not an option.

Closing nonessential facilities, going to a four-day work schedule and sweeping every account to generate money to balance the budget are all on the table, he said.

“There are no sacred cows when you have a billion dollar shortfall,” Gibbons said.