Sandoval, lawmakers reach budget deal

CARSON CITY -- Republican Gov. Brian Sandoval and the Democrat-controlled Legislature agreed to a $6.2 billion general fund budget plan Wednesday that reduces government spending but avoids drastic cuts to education and social services.

The two-year budget was balanced in part with about $620 million in taxes Sandoval and other Republicans hoped would expire, or sunset. But Democrats said the revenues were necessary to lessen the impact on teachers, college students and the poor.

In exchange for Republicans agreeing to extend the taxes, Democrats agreed to a slate of reforms to laws covering education, collective bargaining and public employee benefits.

"With the budget and reforms we enacted, massive teacher layoffs and unacceptable increases in class size can be avoided," Sandoval said, standing before dozens of lawmakers, reporters and lobbyists in the legislative building.

The budget agreement -- forged after five days of round-the-clock negotiations -- eliminated hundreds of millions of dollars in borrowing, diversions and one-time money grabs that had been included in earlier proposals.

"The gimmickry is gone," said Jeremy Aguero, an analyst at the Las Vegas-based economic research firm Applied Analysis. "I think both sides did a hell of a job."

The compromise budget came together after months of fighting between lawmakers and the governor, an ongoing confrontation that included student protests outside the Legislative Building and heated confrontations in the hallways and private meeting rooms.

"I can't say we didn't holler at each other once in a while but we all came back to the table," said Senate Minority Leader Mike McGinness, R-Fallon.

The impetus to make a deal came from a May 26 Supreme Court decision that suggested the state couldn't grab money from cities, counties and other local entities. The case involved a $62 million water fund in Clark County, but Sandoval thought it called into question other local money diversions that accounted for 10 percent of his budget.

Assembly Speaker John Oceguera, D-Las Vegas, said it was important to constituents that the fighting ended in time to close a budget before the scheduled June 6 conclusion of the session.

"They wanted us to reach consensus to avoid the kind of deadlock that often paralyzes government," Oceguera said. The result is a 2011-13 general fund budget of $6.2 billion, roughly the same amount as the general fund budget for 2009-11.

The total state budget, a figure that includes highway money, federal funds and other revenue, will be $17.4 billion, a decrease of about $500 million from the current budget.

"We made cuts, we secured revenue, most importantly we listened to our constituents," said Senate Majority Leader Steven Horsford, D-Las Vegas. "We took a balanced approach to the budget."

Although cuts under the compromise budget aren't as bad as they would have been under Sandoval's original proposal, which didn't include the sunset taxes, the state's higher education system will face losses.

Nevada System of Higher Education Chancellor Dan Klaich said funding for the state's colleges and universities would be 15 percent less than two years ago, some of which will be made up with a 13 percent increase in tuition.

"But this was a significant improvement," said Klaich, who watched as the governor and legislators announced the agreement. "We can keep our infrastructure intact. We can avoid significant layoffs. Our job now is to put it all together."

Jim Richardson, lobbyist for the Nevada Faculty Alliance, remained skeptical.

"We are still going to be losing a lot of funding," said Richardson, adding that the 15 percent reduction is on top of a 20 percent cut in 2009.

K-12 schools fared better than colleges and universities.

State Superintendent of Public Instruction Keith Rheault estimated the budget deal will bring about $80 million more to Nevada's public schools. The increase will boost per pupil support above the current $5,188 and is much higher than Sandoval's original proposal. Earlier in the session, Rheault calculated per pupil support would drop to $4,870. Now, per pupil support this fall will be $5,263. That will increase to $5,374 in fall 2012.

"It's about $400 more per student than that we originally were looking at," Rheault said.

Joyce Haldeman, Clark County School District associate superintendent, noted that local property tax revenue received by the district has dropped by $113 million, so she could not say that employees won't be laid off.

"We have more money today than yesterday, so I am happier," Haldeman said.

Craig Stevens, lobbyist for the Nevada State Education Association, said teachers and school employees will suffer at least a 9 percent salary cut next fall.

The budget compromise includes a 2.5 percent salary reduction, plus a requirement that teachers contribute 5.3 percent of their salary toward their retirement benefits. Salary reductions must be negotiated between teachers unions and school districts.

Sen. Sheila Leslie, D-Reno, was not rejoicing over the agreement.

"There still will be (education) layoffs," she said. "This is not a budget anyone can be proud of."

The budget compromise also includes several reforms wanted by Sandoval and other Republicans.

Primarily, Democrats agreed to change state law to bring an end to "last in, first out" policies school districts use to make layoffs. Under the change, achievement and job performance by teachers and administrators would be factors in layoff decisions, in addition to seniority.

The reforms also include changes to the state Board of Education. Instead of an elected 10-member board, a new 11-member board will be created that will include four elected members, each from a congressional district, and others who will be appointed by the governor, the Senate majority leader and the Assembly speaker.

The budget compromise didn't include a change sought by Assembly Republicans to state law regarding construction defect liability. Current law results in contractors paying exorbitant legal fees to handle frivolous lawsuits, they argued.

Democrats agreed to approve Assembly Bill 401 which makes some changes to the liability law but doesn't eliminate the language Republicans wanted out.

Said Assembly Minority Leader Pete Goicoechea, R-Eureka: "I don't think either side got everything they wanted."

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.

Trending topics:

• Nevada Legislature
• budget deal
• Gov. Brian Sandoval
• Benjamin Spillman
• Democrat
• Las Vegas
• politics
• Republican

Comments

Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

1. deacon427 Jun. 3, 2011 | 1:34 p.m. Report Abuse

   Let us be clear here folks, THERE ARE NO WINNERS with this budget, NONE! State workers got screwed. Teachers got screwed! The Elderly got screwed. The People of Nevada got screwed. Everyone got screwed except for the Gov and the Legislature. This is by far the most amazingly inept performance I have ever scene, so much so that it could qualify as a staterical comedy of epic proportions! Governor Sandoval your grade is big fat F! You failed to schieve anything. Someone had the gull to refer to you as a statesman. Are you kidding me??? That would mean that you will fall in the category with Abraham Lincoln, Teddy Rooesvelt, FDR and others, and you sir are not even close to being in that ball park, and in fact you are not even on the same planet. In fact I saw NO one in this latest medicore effort who would even come close to being thought of as a statesman. We had the chance of winning the Super Bowl, the World Series or the NBA Finals, and we limply pooched the ball, hit a foul ball, and caught nothing but air on the shot; in short we blew it BIG TIME!! Gov and Legislature you have NOTHING to be proud of...NOTHING!!

2. deacon427 Jun. 3, 2011 | 10:10 a.m. Report Abuse

   Did not know that oathkeepers were concerned with state politics, I thought it was only Federal, but ok. They are correct that the Governor and the legislature should up hold the constitution of the state in so much as to not deficit spend for instance. However, more importantly the Governor and legislature are elected to do what is best for all Nevadans in order to keep Nevada prosperous and great. This does not mean that cut the budget into the abyss, and neither does it mean that they spend the taxes we pay like drunken sailors. There needs to be common sense used here as well as a certain prudence to make sure that ALL Nevadans are taken into consideration. Illegal immigrants are NOT citizens of Nevada, and they are not citizens of the USA, and therefore we should not be paying a dime for anything that they may need, because they are not entitled to it. There is much to do with reform to education as well, but taking tenure away, end-running collective bargaining, and putting a teacher's future in the hands of administrators and parents is by far the most ludicrious thing I have ever heard of. I would have expected no less from the total inept legislature and Governor that we have currently, and it saddens me to have to say that. I want real leadership to provide real solutions to real problems that we have in Nevada, and so far I have not seen hide nor hair of this happening any time in the near future.

3. Bob_Realist Jun. 3, 2011 | 1:00 a.m. Report Abuse

   @momof2lv, what about the people who do not pay taxes but receive a pretty hefty monthly entitlement? When are our politicians going to start asking for millions of dollars back from them? Horsford was holding up the budget talks for a while there demanding more money to give to the freeloaders. He wanted to make sure the downtrodden got their annual cost of living raise. Let's makes some cuts to welfare and rotate the people out who consider Section 8 their permanent home. These aren't FEMA trailers we are talking about, they are structures with foundations (if they haven't been torn up yet.
   
   @jan.mcdaniel, the next question that should be asked is how many firefighters moonlight as contractors for CCSD. I looked at one today who gets an additional $65K a year for whatever he does at CCSD. His normal paycheck is three times that of a teacher and is subcontracted to the school system for a salary that could furnish two more teachers. When will CCSD start worrying about education and stop filling their ranks with people like this and people who are not qualified for a position by state mandate.

4. momof2lv Jun. 2, 2011 | 4:27 p.m. Report Abuse

   I heard the best idea a few days ago from a friend. Want to raise money? Tax each working person $5 per paycheck. Nobody will miss $5 a paycheck but multipl that by the roughly 1.3 million people employed in Nevada and you've got an education fund with 156 million to be divided between school districts to be utilized for kids.

5. Wallbangers Jun. 2, 2011 | 2:08 p.m. Report Abuse

   WOW...Day of Reckoning is almost upon us (can't wait!)...
   
   Our military, law enforcement, and ELECTED OFFICIALS need to HONOR THEIR OATH TO THE U.S. CONSTITUTION!!!
   
   oathkeepers.org

6. Peter Griffin Jun. 2, 2011 | 2:05 p.m. Report Abuse

   @TANKER Republicans in this state DO NOT WANT mining taxed, the do not want a state tax. State employees and teachers will foot the bill here. It is that simple. NO ONE should be proud of this budget. I think both criminal parties got what they wanted.......

7. jan.mcdaniel Jun. 2, 2011 | 2:04 p.m. Report Abuse

   Hmmm 15% from teachers while the yahoo firefighters continue to milk the system and collect 6 figure salaries! This is an abomination. BTW, I am not teacher and have read that with a Masters Degree in Clark County and 20 years experience you are lucky to make 70K a year as a teacher Yet, people who exercise at the YMCA while at "work" and find ways to get obscene amounts of overtime by calling off sick and then letting his friend get overtime is eggregious. Oh I forgot, the population here only has hatred for teachers and education in general but give them a yahoo and they'll open their own wallets to add to the firefighters 6 figure salaries. Disgusting but speaks volumes about mentality here..

8. TankerUSMA1975 Jun. 2, 2011 | 1:59 p.m. Report Abuse

   The Constitutional protection for the mining industry and the state laws that allow huge deductions need to undergo changes. I am not advocating the Alaska solution of a 25% royalty on oil companies, although based on recent earnings reports, that doesn't seem to have had a negative effect on their profits.Two mining companies are planning on opening mines in the Comstock Lode and the Carlin Trace.
   
   The issue was highlighted in a recent power point presentation at the Barrick Mining annual meeting. One of the mines highlighted in the power point was the Cortez Hills Mine in Northern Nevada. According to the power point, in 2010, the mine produced 1,140,000 ounces of gold (over 35 TONS) at a production cost of $312 per ounce. During the first quarter of 2011, the mine produced 366,000 ounces (over 11 TONS) of gold at a production cost of $220 per ounce. If you project a sale price of $1000 over cost of production,that results in a profit of over $1,500,000,000. Based on what the mining industry paid in taxes in 2009, the tax payment to the state of Nevada will probably be less than 50,000,000. The power point goes on to point out that the projected production from Cortez Hills for 2011 will be between 1.30 to 1.45 MILLION ounces (40-45 TONS)at a production cost of $235-245 per ounce. This is natural resource that should provide significant benefits to the citizens of Nevada. Unless the Legislature acts quickly, another two years will pass without any significant action to change the tax structure of the state.
   
   In 2009, the mining industry paid 48,600,000 on gross revenue of 5,800,000,000. In 2010, the gaming industry paid 416,000,000 on gross revenue of 5,800,000,000. Mining pays about 10% of what gaming pays in taxes.

9. Peter Griffin Jun. 2, 2011 | 1:56 p.m. Report Abuse

   @BRIAN SHHHHH Most the Conservative Republicans on this post believe you have to CUT your way out of a depression/recession. You are correct, EVERY economics book will agree. CUTS and TAXES are necessary to recover. Don't tell them that though.

10. Brian.Lowery Jun. 2, 2011 | 1:47 p.m. Report Abuse

    So, what part of this budget is considered reform? Yes, they trimmed the budget a little, but they have done nothing to ensure that new revenue will be generated for the state, specifically education! We can't simply keep cutting the budget and not generating revenue to tread water. And taking out a $155 million line of credit? How is that fiscal responsibility? It's like borrowing money from your wife to pay the rent.

Read All Comments