CARSON CITY – A proposal in Gov. Brian Sandoval’s budget to raise $190 million in revenue by securitizing the state’s insurance premium tax was called “questionable fiscal discipline” today by Senate Majority Leader Steven Horsford.
Sandoval Chief of Staff Heidi Gansert said the proposal is a “last resort” to be employed if needed to maintain essential services in health and human services and public education.
Members of the Senate Finance and Assembly Ways and Means committees heard details of the plan today during a budget overview by state Budget Director Andrew Clinger.
Horsford said the proposal would obligate future legislatures to pay back the $190 million plus $24.3 million in interest payments to generate the money for the current biennium. Payments of about $53.6 million would be required starting in 2014 through 2017.
Horsford, D-Las Vegas, likened the proposal to a homeowner securing a home equity line of credit to use to pay ongoing expenses rather than home improvements.
“It’s like taking out a second on my house to pay my bills,” he said. “And I think a lot of families that have done that, we have seen the consequences of that approach and it has put people in bankruptcy. How is this proposal by the administration any different?”
Gansert said the decision to seek the securitization was not Sandoval’s first choice, but was included in the budget to protect critical services. The proposal will restore $119 million in cuts to the Department of Health and Human Services, including $54 million to keep personal care services to help senior citizens on Medicaid stay in their own homes.
Gansert said the plan does not raise taxes or take money out of the private sector. It is a last resort and may not be needed if tax revenues come in above the Economic Forum projections, she said.
“The priority of this administration is to allow the economy to recover and to do that we held the line on taxes,” she said. “Is this ideal, absolutely not.”
Sandoval’s $5.8 billion general fund budget, which does not raise taxes or fees, is designed to keep as much money as possible in the private sector to promote job creation, she said.
Clinger noted the plan represents only 3.2 percent of total general fund spending, “so overall it is a very small percentage of total state general fund resources.”
But Horsford said the proposal “kicks the can completely to the next biennium and that is questionable fiscal discipline.”
Senate Majority Leader Steven Horsford questions the insurance tax securitization plan:
Horsford says homeowners have gone into bankruptcy using such practices:
Horsford calls the plan questionable fiscal discipline:
Chief of Staff Heidi Gansert says the plan is not the administration’s first choice and may not be needed: