Nevada state budget (2008-2009)
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In April 2009 Nevada officials stated that the state is facing a budget gap of about $2.2 billion. Gov. Jim Gibbons' budget director said the total could approach $3 billion. [1] Richard Bryan, former U.S. senator, said he has never seen anything of this magnitude in his political life.[2] In 2008 in response to the state's budget crisis, the Governor withdrew $267 million from the the rainy day fund however the funds were not enough to cover approximately $1.2 billion in cuts that were later made.[3] In addition, the Gov. Gibbons proposed a 6 percent salary cut for all state employees and a 36 percent cut for higher education for fiscal year 2010. However, some lawmakers call the approach "draconian" and emphasize that alternative approaches must be taken. [4] Nevada legislators plan to use $600 million of the state's expected $1.5 billion in federal stimulus funds to help narrow the shortfall gap.[1]
[edit] Impact of budget woes
- Nevada's unemployment rate rose to 10.1 percent in February 2009 compared to 9.4 percent in January 2009. According to state records the state's highest recorded rate of 10.7 percent was in late 1982. Casino-related leisure and hospitality hiring was down 1,000; hiring in professional business services was down 1,200; construction was down 500; manufacturing was down 200 and mining was down 100. However, government hiring was up 5,000; education-health services was up 1,000 and hiring in the financial activities sector was up 100. [5]
- The Public Utility Commission of Nevada is considering a 16 percent rate increase for NV Energy customers on an annual basis. The increase will likely add anywhere from $20 to $30 a month for customers. The increase would be in addition to the already proposed rate increase for September 2009."Seventy percent of this increase is due to the investments we have made in generating a facility here in the Vegas area," said Roberto Denis, Senior Vice President for NV Energy. [6]
- In late March 2009 University of Nevada-Reno officials proposed plans should the school need to cut its budget 20.7 percent. If the cuts take place the university estimates that the institution could lose two sports, 25 percent of classes, and its planetarium. [7]
- In Clark County the Service Employees International Union agreed to reduce its cost of living allowance increase from 3 percent to 1 percent and reduce the top range of merit raises by 1 percent for one year. “The economy is certainly not getting any better and when we look at the numbers, the numbers don’t look very promising,” SEIU Nevada president Al Martinez said. “Layoffs can happen and when the word was mentioned, we knew we had to do something about it. These are tough times and we want to do our part.” [8]
[edit] Budget background
Nevada operates on a biennium, covering two fiscal years at a time. For example, the 2009-2011 biennium consists of year 1, July 1, 2009 to June 30, 2010, and year 2, July 1, 2010 to June 30, 2011. [9] Unlike the federal government, Nevada’s Constitution requires that the state have a balanced budget and not deficit spend. Individual state agencies submit their budget requests along with past expenditures and revenue to the Governor who proceeds to issue a budget recommendation for the upcoming fiscal year to the Legislature. Both the State Assembly and the Senate are required to make any necessary changes or adjustments to the budget until the bill is passed in both houses. When the Legislature passes the bill the Governor approve of the bill. [10]
- The General Fund is a significant source of revenue for the state, accounting for 37 percent of total projected revenue. Federal funds account for almost one quarter, 21 percent, of the state’s projected revenues. Other revenue encompasses a variety of items from private gifts and donations to various fees, assessments, and taxes. [10]
- The two main sources of the state’s General Fund revenue are gaming taxes and sales taxes, together accounting for almost two-thirds of the total projected General Fund revenue. [10]
[edit] Budget figures
The following table provides a history of Nevada's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $11.2 [11] | $73.7 [11] |
| 2001 | $12.6 [11] | $77.3 [11] |
| 2002 | $14.0 [11] | $81.3 [11] |
| 2003 | $15.1 [11] | $87.8 [11] |
| 2004 | $16.2 [11] | $100.2 [11] |
| 2005 | $17.4 [11] | $112.5 [11] |
| 2006 | $18.8 [11] | $123.1 [11] |
| 2007 | $20.4 [11] | $127.2 [11] |
| 2008 | $22.1 [11] | $131.5 [11] |
| 2009 | $23.9* [11] | $136.0* [11] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- In February 2009 Nevada experienced its 14th month of declining revenue. According to a report by the Gaming Control Board Nevada casinos pulled in $830.9 million in revenue for February, an 18.1 percent drop from 2008. Las Vegas Strip gaming revenue was down 23.5 percent in February, while resorts on Lake Tahoe's south shore posted a 26.8 percent decrease. [12]
- Nevada lawmakers said March 31,2009 that projections for state revenue for fiscal years 2010 and 2011 are down by at least 30 percent, $500 million less than estimated just five months ago, compared with the current biennium. [13] The current 2008-2009 budget, as approved in 2007, is $6.8 billion. After budget cuts earlier this year, spending stands at about $6.3 billion. The $5.1 billion in revenues would represent revenue shortfalls of 25 percent in relation to the approved budget, and about 19 percent in relation to actual spending. In December 2008 it was estimated the state would see a total of $5.6 billion in tax revenue. [14]
- Some lawmakers are criticizing pay increases for the Governor's staff during a budget crisis. The pay increases places the staff's salary at nearly nearly twice what lawmakers had approved. However, the Governor said that the increases were possible because he now has 17 staff members, fewer than the legislatively approved 27. A 1999 state law allows governors to set pay for their immediate staff at any figure if the total salary budget for the office doesn't exceed what was set by the Legislature. [15]
[edit] Proposed actions
[edit] Governor Jim Gibbons
In light of the state's growing budget gap Governor Gibbons proposed a nearly 36 percent cut in higher education.[4] Additionally the Governor recommended a 6 percent salary cut for all state employees in his $6.2 billion budget recommendation. However, despite necessary cuts the Governor said that he will not consider tax increases. [16] In 2008 the Governor withdrew $267 million from the rainy day fund in order to avoid making budget cuts however later approximately $1.2 billion in state budget cuts were made. [3]
[edit] Republicans
Even with a large looming budget gap Republican lawmakers said that they aren't content with the Governor's proposed budget cuts. Sen. Bill Raggio called the cuts "draconian." [4] Assembly Minority Leader Heidi Gansert proposed an alternative bill with aggressive forced savings plan. Gansert suggested earmarking significant portions of money that comes in over projections for the rainy day fund. "It's important so we can get out of this peak-and-valley revenue stream," she said. [3]
[edit] Democrats
Democrat legislators said that like the Republicans they too believe that the Governor's cuts are too large. The Governor's reluctance to discuss tax increases, said lawmakers, is unreasonable. "Gibbons knows there are 28 (Assembly) Democrats, and we can pass new taxes," said General Assemblyman Richard Segerblom. "We aren't going to raise new taxes willy-nilly, but we won't fire half the university staff." However, going to gaming for more tax dollars should be a last resort, Segerblom said. He listed establishing a corporate income tax, gross receipts tax, or increasing the payroll tax, as better alternatives. Segerblom is also among the Democrats supporting Assembly Speaker Barbara Buckley's position to first eliminate some existing tax loopholes and other incentive programs that may be abused."[16]
[edit] Economic Stimulus Package
Nevada is expected to receive $1.5 billion from the $787 billion dollar economic stimulus. [1] All told, the federal stimulus plan would create or save 34,000 jobs in Nevada, based on White House estimates. [17] However, like some Governors, Gov. Gibbons said that he would not accept $77 million in unemployment funds because it would require an expansion of coverage to some people not previously eligible. Additionally the Governor added that he felt taking the money would be a threat to the state’s sovereignty. But, in March 25,2009 Gibbons decided to accept the funds.[18] Gibbons was quoted in The New York Times saying:
"We have the responsibility to do everything we can to help our unemployed workers get through these difficult times, even if that means passing legislation that we would not necessarily approve during prosperous times."[18]
For more information on how the federal stimulus funds are being used in the state of Nevada, visit the state recovery website.
According to preliminary reports Nevada is expected to receive:
- $84 million towards Medicaid [19]
- $77 million for unemployment [18]
- $201 million for road construction [20]
- $32 million to fund energy efficiency improvement projects [21]
[edit] Budget transparency
Nevada Open Government is the website which hosts the state's searchable online database of financial data. The site was created by Governor Jim Gibbons's executive order, and became functional on January 15th, 2009.
[edit] Legislation
[edit] Government tools
Nevada Open Government is a Website where records of Nevada state spending are made available. Currently, the site is limited in the scope of information it contains. As more funds become available, it is anticipated that more government spending data will be placed online.
The following table is helpful in evaluating the level of transparency provided by a state spending database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| Nevada Open Government |  | | | |  | |
[edit] Limitations and Suggestions
As the table above notes, the site is not searchable and lacks information on grants, contracts, and state employee salaries.
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[22]
- Nevada will receive an estimated $1,052,020,435 [23]
- The economic recovery website to show how legislators and government officials in Nevada are spending Federal funds is available here.
[edit] Independent transparency sites
The Nevada Policy Research Institute developed its own transparency website, TransparentNevada.com.[24] This site will focus primarily on local transparency, complementing the state's site, which focuses primarily on state spending transparency.
[edit] Public employee salary information
TransparentNevada.com, a project of the Nevada Policy Research Institute,[25] has made Nevada salary data available here.
[edit] See Also
Nevada taxpayer-funded lobbying
[edit] External links
- Nevada Policy Research Institute
- TransparentNevada.com
- Nevada Taxpayers Association
- Nevada Open Government, official website
- Nevada Division of Budget and Planning, Department of Administration
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
[edit] Additional reading
[edit] References
- ↑ 1.0 1.1 1.2 Associated Press,"Lawmakers discuss budget problems," April 2,2009
- ↑ Las Vegas Sun, "Gibbons shunned by state lawmakers", February 13, 2009
- ↑ 3.0 3.1 3.2 RGJ,"Nevada lawmakers debate how to save," February 24,2009
- ↑ 4.0 4.1 4.2 Las Vegas Sun,"Gibbons shunned by state lawmakers," February 13,2009
- ↑ Associated Press,"Nevada jobless rate climbs," March 20,2009
- ↑ KVBC,"NV Energy proposes 16 percent rate increase," April 6,2009
- ↑ US News and World Report,"University of Nevada-Reno Plans for 20.7% Cut," March 31,2009
- ↑ Las Vegas Sun,"County, employee union agree to cut pay increases," March 30,2009
- ↑ Nevada Open Government: Budget Summary, "2009-2011 Biennium: Governor's Recommended Budget", 2009
- ↑ 10.0 10.1 10.2 State of Nevada,"Introduction to State Budgeting," October 2007
- ↑ 11.00 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 US Government Spending,"Nevada State and Local spending," retrieved April 7,2009
- ↑ Associated Press,"Sector Snap: Casinos fall on Nevada revenue drop," April 7,2009
- ↑ Associated Press,"Nevada revenue shrinking," March 31,2009
- ↑ Las Vegas Review Journal,"Budget forecast looking worse," April 2,2009
- ↑ MSNBC,"Nevada governor defends pay increases for office staffers," March 24,2009
- ↑ 16.0 16.1 Las Vegas Review Journal, "State Budget Crisis takes center stage", February 8, 2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved April 7,2009
- ↑ 18.0 18.1 18.2 The New York Times,"Nevada Governor Retreats on Unemployment Stimulus Funds," March 25,2009
- ↑ Associated Press,"Nevada getting about $84 million in stimulus funds for Medicaid," April 7,2009
- ↑ KOLO-TV,"Stimulus Funding for local roads," April 7,2009
- ↑ Las Vegas Sun,"Nevada gets $32 million in stimulus grants for energy efficiency projects," March 26,2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ [1]
- ↑ New Transparency Website Launched, Nevada Policy Research Institute, September 8, 2008
- ↑ Nevada Policy Research Institute homepage
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