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Home > Featured > Sisolak declares fiscal emergency after estimating nearly $1 billion state budget shortfall

Sisolak declares fiscal emergency after estimating nearly $1 billion state budget shortfall

By Lucia Starbuck

Feature Image: Trevor Bexon

Gov. Steve Sisolak declared a state of fiscal emergency this week after estimating a budget shortfall potentially nearing the $1 billion mark due to impacts on gaming and sales tax during the COVID-19 pandemic.

Gaming and sales tax make up almost half of the State General Fund.

Nevada is estimating a shortfall of the state’s general fund revenue of $741 million to $911 million for the fiscal year ending June 30, 2020. This estimate comes from the governor’s finance office and the Legislative Counsel Bureau. It includes a projected shortfall in the state’s Distributive School Account.

The declaration gives Sisolak and the Legislature’s Interim Finance Committee the authority to transfer money from the state’s “Rainy Day Fund” to the state’s general fund. The Rainy Day Fund has nearly $400 million in reserve funds.

“With the closure of Nevada businesses, including the gaming industry, that was necessary to protect the health of Nevadans, the drop in revenue is not unexpected and it is significant,” Sisolak said in a statement. “While we appreciate the additional assistance from the federal government to help address the immediate funding needs for the public health crisis, the state is now in a position where [it] will be forced to make very difficult decisions.”

In early April, Sisolak also directed state agencies to identify areas within their budgets for potential cuts during the next two fiscal years. The state called for agencies to cut budgets by four percent across the board for the fiscal year of 2020, which would add up to more than $170 million. With requested budget cuts of six to 14 percent for fiscal year 2021, the total could be around $687 million for the biennium. 

State general funds support state programs and agencies, including criminal justice, education, conservation efforts, economic development, public health, Medicaid and additional public needs.

Though some have speculated he would, the governor has yet to call for a special session of the state legislature.

“I will continue to work closely with our partners in the legislative branch on these decisions, including the timing of a potential special session,” he said in a statement

Nevada isn’t alone in its struggles. Government officials from the Western States Pact—which comprises Nevada, California, Colorado, Oregon and Washington—sent a letter to Congressional leadership requesting $1 trillion in relief for the COVID-19 pandemic.

A portion of the letter read as follows:

“Without federal support, states and cities will be forced to make impossible decisions – like whether to fund critical public healthcare that will help us recover, or prevent layoffs of teachers, police officers, firefighters and other first responders. And, without additional assistance, the very programs that will help people get back to work – like job training and help for small business owners – will be forced up on the chopping block.”

Help with unemployment in Nevada

Although Sisolak has given the okay for the lifting of some restrictions, including closures of what were deemed nonessential businesses, a record-breaking amount of Nevadans are continuing to file claims for unemployment benefits—and many have still been unable to get through the system.

Sisolak signed an emergency directive to allow the Nevada Department of Employment, Training and Rehabilitation to hire contracted staff to help process unemployment claims. This workforce can include temporary staff, retirees and former staff.

“We are optimistic this Directive will provide the flexibility we need to hire staff in support of all facets of the [Unemployment Insurance] and Coronavirus Aid, Relief, and Economic Security (CARES) Act processes,” DETR’s director Heather Korbulic said. “We will work expeditiously in the hiring and training of staff engaged under this Directive, so we can get benefits to Nevadans in a [more timely] fashion.”

This directive is in place as long as Nevada is in a state of emergency. Sisolak said he doesn’t have a timeline for when the declaration will be terminated.

Read more news about COVID-19 in Reno

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