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Home > News > Rory Reid plan to balance state budget without raising taxes gets favorable response for theory, but details lacking

Rory Reid plan to balance state budget without raising taxes gets favorable response for theory, but details lacking

By ThisIsReno

by Sean Whaley, Nevada News Bureau: A plan released today by Democrat governor candidate Rory Reid on how to balance the Nevada state budget without raising taxes received some praise from a free market think tank even though many questions remain, including whether the proposal includes an overly optimistic prediction of future tax revenue growth.

Reid discussed his plan Thursday on the statewide television show Face To Face with Jon Ralston, saying the target he used for a balanced budget was $2.5 billion. If the shortfall is higher, Reid said he has other ideas to close the gap.

Reid said he has balanced budgets as Clark County Commission chairman that are as big as the state government budget for eight years, in good times and bad, without raising taxes. He said every number in his plan can be justified.

He acknowledged signing off on generous employment contracts for local government employees, but said he is now working to reduce those costs.

Layoffs will likely be part of the budget plan, but Reid would not specify numbers.

“There will be jobs lost,” he said.

But Reid defended his plan, saying he is the only major party candidate to present a budget balancing plan.

“Brian Sandoval has no experience with a large budget, and he doesn’t have a plan for action,” Reid said.

Geoffrey Lawrence, a fiscal policy analyst at the Nevada Policy Research Institute, said a review of Reid’s plan shows several good points, but it includes some questionable assumptions as well.

“Overall I’m very supportive of most of the ideas that are in the plan,” he said. “There are also some major assumptions that are made that may or may not bear out.”

Lawrence said one example is Reid’s belief that state tax revenues will come in $615 million higher in the second year of the budget than most people are anticipating. Whoever is governor will have to abide by the forecasts made by the Economic Forum, not rely on a personal assessment of what the level of tax revenues will be, he said.

The next two-year state budget has an anticipated shortfall of at $3 billion compared to what is viewed as needed to provide basic government services and fund education. Expiring tax increases and the loss of federal stimulus funds, along with much lower tax revenues, are the biggest contributors to the funding gap.

Both Reid and Brian Sandoval, the Republican candidate and frontrunner in the race, say they can balance the budget without raising taxes.

Reid’s plan, called “Moving Nevada Forward,” would cut the number of state agencies from 26 to 16, which he claims would save nearly $50 million, and cut funding to state constitutional officers, such as the attorney general and treasurer, by 50 percent, saving $26 million.

Reid would also seek a greater share of federal tax dollars to support state programs, bringing in an estimated $186 million, and cut down on tax deadbeats for $9.2 million in additional revenue.

Reid criticizes outgoing incumbent Gov. Jim Gibbons for the state’s fiscal condition, saying: “It is the legacy of Jim Gibbons, George W. Bush-style mismanagement, and years of postponing tough choices.”

Sandoval’s response to the Reid plan was brief: “Since Rory’s plan relies on $615 million in revenues which don’t exist and over half a billion in cuts which are based on faulty assumptions, it’s impossible to take this plan seriously.”

Sandoval issued a budget plan earlier this year to solve the $800 million shortfall in the current budget, but has not presented his ideas on how he would balance the upcoming budget without new taxes.

The two candidates are scheduled to debate for the first time on Sunday.

Another example of an assumption that needs further explanation is the proposal to cut Medicaid fraud in half to save $41 million, Lawrence said.

“Which is a great idea but if it was easy to do, it would have already been done,” he said.

On the plus side, Reid proposes to extend the employee furlough program and delay pay raises, saving $480 million, Lawrence said.

The plan could move the state in a positive direction if some of the smaller issues can be worked out, he said.

“It would be a boon for the state to have a leaner, more efficient government that still offers quality services,” Lawrence said.

Lawrence said he noticed that Reid frequently criticizes Gibbons for the state’s fiscal condition, but then relies on Gibbons’ SAGE Commission for many of his money saving ideas. The Spending and Government Efficiency Commission created by Gibbons made a number of recommendations on how to improve state government.

Reid did compliment Gibbons on the creation of the SAGE Commission in his Face To Face interview.

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Audio clips:

Rory Reid says he has experience to balance state budget:

082610Reid1 :19 that I could.”

Reid says Sandoval’s only budget plan was balanced on the backs of kids:

082610Reid2 :17 backs of kids.”

NPRI analyst Geoffrey Lawrence says the Reid plan has some good ideas but also some questionable assumptions:

082610Lawrence1 :17 not bear out.”

Lawrence says the idea of streamlining government is a good one:

082610Lawrence2 :15 offers quality services.”

Lawrence says Reid criticizes Gibbons even though many of his proposals come from SAGE Commission:

082610Lawrence3 :14 the governor, so.”

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