In response to the Nevada Economic Forum’s projection that Nevada will have approximately $330 million more, including room tax revenue, available for General Fund spending in the next biennium, Geoffrey Lawrence, the deputy director of policy at the Nevada Policy Research Institute, urged lawmakers to exercise fiscal responsibility:
“While it is encouraging to see that the Economic Forum is projecting modest private-sector growth for the Silver State over the next two years, which will result in additional state tax revenues, lawmakers should exercise restraint and budget prudently around those projections.
“Governor Brian Sandoval’s Executive Budget proposal deserves praise for reining in the rapid growth in state spending and, thereby, protecting Nevadans from higher tax rates that would inevitably worsen the state’s unemployment figures and stymie recovery. However, the Executive Budget also contains several objectionable gimmicks — foremost of which is a $190 million loan against future insurance premium tax revenues. This borrow-and-spend tactic will hurt the state’s long-term outlook as the governor protects an inefficient spending structure and burdens future legislatures with debt.
“In 2005, lawmakers increased inflation-adjusted, per-capita General Fund spending by more than 30 percent. While Gov. Sandoval’s budget proposal would bring Nevada’s spending closer to the state’s historic trend line, more can be done.”
Earlier this year, NPRI highlighted how Nevada can save more than $3.5 billion in taxpayer resources during the next budget cycle through specific recommendations highlighted in its “Better Budgeting for Better Results” policy study.
“As presentations to the Economic Forum detailed, the individuals making up Nevada’s economy are still dealing with numerous challenges, including rising gas and food prices and a struggling housing market,” said Lawrence. “Also, the U.S. Bureau of Labor Statistics reports that Nevada’s ‘effective’ unemployment rate is 23.7 percent.
“Nevada policymakers owe it to their constituents to consider the historical evidence showing that increased spending has not led to superior results in the major policy areas pursued by Silver State government. In the last 50 years, for instance, Nevada has nearly tripled its inflation-adjusted, per-pupil K-12 education spending, but results have remained stagnant or even deteriorated. Despite the increased funding, Nevada’s graduation rate has fallen to under 42 percent — worst in the country.
“Elected officials need to realize that the state’s methods of spending are flawed and that wholesale structural reform is necessary, especially in the areas of K-12 and higher education, labor compensation, Medicaid, and public works finance.
“Upon hearing the news that additional revenues may be available for the next budget cycle, many policymakers will likely rush to spend that money through an expansion of programs. The first priority of lawmakers and the governor, however, should be to eradicate the borrow-and-spend tactics that have been incorporated into the current budget proposal. Prudence requires that elected officials meet the state’s fiscal challenges this legislative session and do not push them off onto future legislatures.
“There are many ideas in the Better Budgeting study for meeting current budget challenges with available revenues. New projections from the Economic Forum suggesting that additional revenues are available does not in any way diminish the validity of these recommendations, nor the importance of safeguarding taxpayers from excess and abuse.”
NPRI’s Better Budgeting for Better Results study is available online at http://www.npri.org/publications/better-budgeting-for-better-results.
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