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Think tank sees inflated budget shortfall, no need to raise taxes
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LAS VEGAS REVIEW-JOURNAL
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Updated: Sep. 16, 2010 | 7:37 a.m.
CARSON CITY -- A conservative think tank is accusing state officials of misleading the public by exaggerating a projected state budget shortfall.
State officials, including Budget Director Andrew Clinger, have said that Nevada must tackle a $3 billion budget shortfall in a two-year period that starts July 1.
But the Nevada Policy Research Institute contends that the true figure is less than half that, $1.4 billion, and that spending must be trimmed rather than taxes increased.
Why the difference? The $3 billion figure includes new spending to end state worker furloughs and reinstate raises, to handle increases in Medicaid cases and to compensate for the loss of stimulus funding and temporary tax dollars.
The amount of the estimate -- which Senate Majority Leader Steven Horsford, D-Las Vegas, said could be as high as $3.4 billion -- is significant. It will guide spending and tax decisions by the Legislature and new governor when the state is mired in a recession. Next year, they must decide whether to increase taxes, cut services, reduce salaries and benefits, end furloughs, lay off workers or, as expected, do a little of everything.
Horsford said last week that he anticipates $1.5 billion in tax increases and $1.5 billion in spending cuts.
The institute suggests a different model.
"We need to restrain spending," said Victor Joecks, deputy communications director of the Las Vegas-based conservative think tank. "We don't need to mislead the taxpayer into thinking it is a crisis."
But Clinger defended his use of the $3 billion figure, contending some additional spending is unavoidable because of increases in the Medicaid and other caseloads.
And Clinger said that there are several major items that affect the budget that the think tank did not mention and that his projection of a $3 billion shortfall includes the effects of tax increases that are ending, federal funds that are expiring and the continuing decline in tax receipts.
For instance, $600 million in federal stimulus funds used to balance the current two-year budget will not be available after this year. The Legislature must either cut spending by that amount or find another source of revenue.
Clinger said temporary tax increases -- such as the 0.35 percentage point increase in the sales tax rate and a near doubling of the payroll tax -- will expire June 30 unless reauthorized by the Legislature.
At the same time, the state is experiencing record growth in Medicaid and other social service caseloads. The net effect of the caseload growth and the loss of the temporary taxes is $500 million, Clinger said.
The Legislature needs to find additional revenue to cover the $500 million or cut spending by that amount.
Another $480 million must be found if the Legislature decides to re-establish the automatic pay increases that most state workers received in the past and if it discontinues the furlough program that requires employees to take one unpaid day off per month. The furlough program cut worker pay by 4.6 percent.
Most teachers and state employees before the 2009 session received grade-in-step pay increases of about 4.5 percent a year. Veteran employees not eligible for such increases typically received $50 to $100 a year in longevity pay for each year of service.
The furlough program and freeze on step and longevity pay will expire June 30. Clinger acknowledged the Legislature in 2011 could vote to keep the furloughs and freezes, sparing the need to find $480 million.
Joecks is disputing Clinger's assertion that the state has to secure $8 billion in revenue during the next two-year budget period to cover furloughs, loss of federal funds and taxes and caseload growth.
"I want the issue framed correctly, and then we can have a debate on what spending should be," Joecks said.
Clinger told the news media two weeks ago that he is preparing a 2011-13 budget plan of slightly more than $5 billion that includes 10 percent cuts for all state agencies.
Joecks said state legislators used stimulus funds in the current budget to cover budget holes when they needed to make spending cuts.
Legislators during the 2010 special session also used $300 million in funding from state agency reserve accounts to cover current spending. That money will not be available in 2011.
Joecks said the institute last year found a way to balance the state budget without tax increases by reducing spending to 2003-05 budget levels, and it intends to come out with a balanced-budget plan for 2011-13 that will not call for increasing taxes.
Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.
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Patrick-
Gaming is 'losing revenue' doesn't mean they're losing money - or they'd be paying no taxes. State employees may make more- but they make more because there aren't enough of them to do meet the demand for governmental supplied services and OT is needed.
that's the fire fighters problem....
@george, Corporate Funded Tea Party courtesy of Cheney and BP and Exxon Mobil. Rove et al bulwark conservatives are panicked because these tea-guzzling lunatics like O'Donnell are sinking the Republicans ship. They May win Beyond the primaries -gawd help all, including Angle. And then Republicans can kiss their behinds goodbye for four more years. Make that at least 8, for recovery time. Ever try to negotiate or 'CONCENSUS BUILD" with a terrorist? Yeah, well, kinda' like that. Tea Party will go down in conservatives' history as the Monster they created and then had to feed, and feed, and try to figure out how to exterminate...and feed.
Patrick, you missed it. Mining wouldn't feel it. Because they're the sacred cow cr@pping bullion in Nevada's otherwise cr@ppy economy. The worse things get, the higher their values go. Unlike Gaming they just don't employ enough for their present bonanza to benefit many out of work Nevadans. And yes, many of their entities are foreign-owned, so there'd be a certain justice in their increased tax contributions helping dig this state out of the tank. As said, who's got the huevos to demand they ante up? Harry? As for expecting anything more in taxes than we're getting from Gaming's Whiney billionaires' club, pure folly and wasn't suggested.
Corporate funded tea party? Who funds the democrats and republicans? Why is Karl Rove so upset over Delaware?
Pete, gaming is losing revenue and still paying the tax and you think they wouldn't feel it if they raised the tax? Give me a break. Sam, sorry but it is now well documented that state and government workers typically make more than their counterparts in the private sector. This is especially true in Nevada were government worker pay is above the national average anyway. Having a political class see unsustainable pay increases by looting other people's hard earned money is not healthy for our Democracy or our economy.
Sam and ima, you're on it. NV Government does know and has known for forever the problems Gaming's caused, like monopolizing Nevada's "industry" while keeping all other viable sectors out of Southern NV, period. With their revenues in the tank we're getting 6.2, is it, from them in taxes?? OK then, let's go up North where the getting's good at the moment, Eureka, Pershing, places we don't hear much about, and they like it that way. Much of that mining is Foreign-owned. They could afford a tax hike in their current hand-over-fist prosperous mode, and barely feel it. And that tax infusion would sure address immediate shortfalls in the State's Budget. Sounds good to some of us, and should sound real good, if only we could get Reid on board for a final makes-sense, take-charge solution to finding the RIGHT place to tax Right NOW....Would he have the cajones to even bring it up? Alienating Foreign-owners and about 1% of the State's residents to benefit the rest of us? Harry, are you there yet?
AMEN:
If Reid didn’t make the deal and Anderson closed, who would have been left for Ponderosa to ship their product to in las vegas? Wouldn't they still have to move their milk to CA/UT/AZ...
Only about 1% of Nevadans work for the state, and - contrary to the SAGE commission (a bunch of CEOs who are probably pulling in 6-figure salaries) - some categories of state employees earn significantly less than city, county, or private sector employees. Engineers working for the state earn about 30% less than engineers working for these other groups. Our salaries have been frozen, we have a furlough day, and our medical coverage will be reduced to just about nothing, with a huge deductible.
Yet, all these cuts will do little to help the budget (1% of Nevadans is a pretty small number). What these cuts WILL do is to drive down wages and benefits for every worker (public and private), and cause even further reductions in consumer purchases. It's a downhill spiral for everyone except the most wealthy. Even in the boom times from 2002 - 2007, workers earning less than $200K/yr saw their real wages rise by only 1.3%/yr, while the upper 0.1% in the US saw their incomes TRIPLE! Heck, if my income tripled, I'd have no problem paying more in taxes! We need to tax the super-rich more; they've benefitted disproportionately at the expense of the other 99.9% of Americans. (Yes, the Bush years of Republican rule were very very good to the financial elites).
Why would any person earning less than $200K vote Republican? Did you like the financial whupping you took so much during those years of frenetic deregulation, that you want more of the same? Do you think that the corporate-funded TEA party will help you? Good grief, get a clue!
Isn't this what conservatives kept saying. Kick the can down the road accepting all this federally printed cash, and when the money gets cut off the State needs to raise our taxes to keep the same level of spending going. No mention of spending cuts, only how do we keep the cash cow alive. Politics as usual until they learn the hard way what happens when you run out of other peoples' money. And that day is getting closer and closer.
iamretired.... Think about something. Pretty much every casino in Vegas has been losing money the last couple of years. If you raise their taxes, where are they going to get the money? What can they cut to pay the extra taxes? They have to raise prices and cut payroll. Atlantic City casinos are pretty much dumps, low staff and poor service. It has not worked. Know the facts before suggesting killing the golden goose that pays your way in life.