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Nevada lawmakers search for funds to reduce depth of impending state budget cuts

By ThisIsReno

SUBMITTED BY SEAN WHALEY, NEVADA NEWS BUREAU

CARSON CITY – In the face of potential college campus closures, hundreds of state employee layoffs and a state budget crisis of unprecedented proportions, there was a tiny bit of good news delivered to state lawmakers today.

The state shortfall that must be made up in the current two-year budget is no longer $1 billion, but $881 million, said state Budget Director Andrew Clinger.

The change is due primarily to a lower figure for the cost of the increased Medicaid caseload the state will have to pay for through the end of the budget cycle on June 30, 2011 that had previously been cited by the Gibbons Administration.

The revised figures mean the total budget cuts needed to balance the budget, if they could commence March 1, now total 20.2 percent, slightly lower than a previous 22 percent estimate.

But Clinger said because of legal notice and public hearing requirements, implementing many potential budget cuts by March 1 is now unlikely. The later the cuts are implemented, the higher the percentage reduction will be required, he said.

With word from Gov. Jim Gibbons that he is considering layoffs of as many as 300 state workers, legislators continued to look for funds to head off the draconian cuts for state agencies and the university system.

As part of a search for funds that could potentially reduce the severity of budget cuts, the Legislature’s Interim Finance Committee today heard a plea from the Southern Nevada construction industry to avoid tapping into a $4.2 billion, local government capital construction fund.

Jeremy Aguero, a principle analyst with the Las Vegas-based firm Applied Analysis, provided an overview of the capital reserve fund for lawmakers on behalf of the Associated General Contractors of Southern Nevada.

Not only is the money already designated for projects, many of which are “shovel ready,” but spending money on construction is a great way of creating well-paying private sector construction jobs, lawmakers were told.

“There is not one dollar of the $4.2 billion that isn’t committed to a project in a capital improvement plan at a local government level,” Aguero said.

He said maintaining capital programs is “arguably more economically important to this state than almost anywhere else in the country.”

Gibbons on Tuesday made a commitment to local government officials that he would not seek to tap into the fund to bail out the state budget.

But the Legislature has not yet made such a commitment.

Senate Majority Leader Steven Horsford, D-Las Vegas, said he needs more information before deciding whether to seek a share of the fund to help balance the state budget.

“The public deserves to know how $4 billion worth of reserve funds are being used,” he said. “If there is justification based on bond covenants or committed projects that can be identified project-by-project; and the number of jobs and the time frame, there shouldn’t be a need to look at that.”

But until that case is made, everything is on the table, Horsford said.

Lawmakers are also looking at taking every available dollar from any state agency reserve funds to reduce the level of reuired cuts. No dollar number from this proposed “sweep” has yet been determined, he said.

The Legislature is still in the information gathering stage in preparation for dealing with the budget shortfall in special session, Horsford said. But he said he is not in favor of across the board cuts.

“We don’t think that approach makes much sense,” he said. “We need to be more focused and strategic. We need to look at certain parts of state government that may not be as essential based on today’s circumstances.”

Both Assembly Speaker Barbara Buckley and Senate Taxation Chairman Bob Coffin, both D-Las Vegas, asked Clinger for more detail on Gibbons’ proposed cuts and his timeline for implementation.

“I think we’ve got to share those things,” Coffin said. “I really want to see those as soon as possible because we’ve got to make our plans.”

Senate Minority Leader Bill Raggio, R-Reno, said the task for lawmakers is daunting.

“It is much more than we anticipated,” he said of the shortfall. “It is going to be a tough, tough project.”

Legislative leaders met later in the day with Gibbons’ staff to go over their list of proposed cuts.

Gibbons is scheduled to make his proposals known in a special state of the state address to Nevadans on Monday. He is also expected to soon call the Legislature into special session to address the budget deficit.

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