By Elliott Parker and William Raggio
By asking how much we have to cut to meet projected revenues, we are thinking about the state’s budget completely backwards. This approach assumes that the state provides services that are luxuries, like eating out at a fancy restaurant, which we can afford to cut when our revenues fall. This is wrong.
The state provides essential services that the private sector doesn’t. We must educate our children in a K-12 system that prepares them for a productive life in the modern world. We must maintain law and order, courts and prisons, highways and functioning state agencies. We must provide help to those who are unable to care for themselves. And we must have good community colleges and universities available for our brightest students, especially if we want Nevada to have a bright future.
How do we best provide these essential services? Can we provide them better, and at a lower cost to the state? Are there things we don’t need to be doing, or are paying too much for? And are there other things we should be doing, with a good return on investment for the state?
We should be asking these questions regardless of whether we have a recession. We should always be looking for efficiencies. We need to address what Nevada can promise for state employee retirement and benefits. Other recommendations of the Sage Commission should be considered, where they are practical.
Once we figure out what we need to provide and how we can best provide it, only then should we figure out how to pay for it.
We already have a small state government. We already limit the growth of our state general fund to inflation plus population growth over the long-run, a limit we have not exceeded in more than 30 years. We already provide the bare minimum of the services essential to a functioning state. We need to stop thinking of a recession as a convenient way to force us to make it even smaller.
We should fund local government in a more fair way. Shifting responsibilities doesn’t save any money, but only forces local government to increase other taxes instead. We should address state rules for collective bargaining, especially the last best offer rule, to make it easier for local governments to address their own budgets.
We now know that our tax structure needs to be overhauled, and we have many suggestions on the shelves. We have not yet faced up to the impact of losing our state’s monopoly on gaming. We have not yet faced up to how services and Internet sales are an increasingly large and untaxed portion of the economy, relative to brick-and-mortar stores selling tangible merchandise. We know we should have broader-based taxes with low rates.
This is a difficult task for a part-time Legislature to accomplish in a very limited time. We both hope that Gov. Brian Sandoval will lead us to do what we all know needs doing, for the long-run good of the state of Nevada.
Elliott Parker is a professor and chairman of the Department of Economics at the University of Nevada, Reno. William J. Raggio retired this year from the Nevada Senate, where he served for 38 years.
