Lawmakers prep for messy combo of rainy day funds, budget cuts, federal relief

By: - May 14, 2020 8:45 pm
Park MGM during shutdown

The Las Vegas Strip on Monday, March 16, 2020. (Photo: Bridget Bennett)

Nevada legislators and state officials are setting the grounds for balancing the current fiscal year budget through a combination of federal relief funds, state reserve money and budget reductions.

The Nevada Legislature’s Interim Finance Committee on Wednesday unanimously voted to declare a fiscal emergency, the second procedural step needed for the state to access its $400 million in Rainy Day Funds. The first step was a declaration of fiscal emergency by Gov. Steve Sisolak, which was made Monday.

The committee also accepted $836 million in CARES Act funds. Unlike other CARES Act funding that was awarded to specific agencies or efforts, this pool of money is flexible and can be awarded to state or local agencies for a variety of covid-related costs incurred between March and the end of this calendar year.

Meanwhile, the governor’s budget staff told lawmakers they are working through the budget reduction plans submitted by public agencies last month. Those plans detail a potential 4 percent budget reduction for the current fiscal year, which runs through June, and upwards of 14 percent for the next fiscal year, which begins July 1.

The state budget shortfall is estimated to be between $741 million to more than $900 million for the current fiscal year, according to the state.

And revenue shortfalls are expected to continue into future fiscal years.

Lots of unknowns

State Sen. Ben Kieckhefer, a Republican representing Carson City and part of Washoe County, asked whether the state had information on what revenue streams are coming up short and by how much.

Russell Guindon, a state fiscal analyst, replied that one certainty is gaming because its tax structure is statutory. Gaming is the second largest revenue source for the state and brought $620 million in tax revenue through April, but is expected to bring in $0 for the rest of the fiscal year. It had been projected by the Economic Forum to bring in $161 million during that time frame.

Beyond gaming tax, he added, “Everything is so uncertain and speculative.”

Guindon added the state would have revenue numbers from April by the end of June. Those numbers will paint a clearer picture of the economic impact of business closures statewide, which started in mid-March, lasted the entirety of April and have continued into May for many businesses.

Assemblywoman Dina Neal, a Democrat who represents an urban part of Clark County, asked about revenue coming from the 2019 Legislature’s AB445 — a bill prompted by a U.S. Supreme Court decision that allowed for the collection of sales tax revenue from online.

Guindon said sales tax from online retailers might be softening the blow of the loss of sales tax collected by brick-and-mortar retailers but that the state is still working to track that information. State analysts have said previously that tracking that information is more difficult than it appears because retailers who do both physical and online sales don’t have to differentiate between the two with the state. Guindon cautioned it also might not be something that can be made public due to privacy laws.

Sales tax is the largest revenue generator for the state.

Kieckhefer told the committee he wanted a “comprehensive look” at how the budget issues are being resolved, including what budget shortfalls are being offset by cuts.

Susan Brown, director of the Governor’s Finance Office, said her department is still working through the budget reduction proposals. She cautioned that the details may not be available immediately.

Similarly, she said it has not been determined how the $836 million in flexible CARES Act funding will be spent. It can be used for both state or local agencies.

Next steps

The next step to accessing Rainy Day Funds will occur Thursday at the Board of Examiners, which is composed of Gov. Steve Sisolak, Attorney General Aaron Ford and Secretary of State Barbara Cegavske. The Board of Examiners chooses what amount to transfer from the Rainy Day Fund to the General Fund. Then, the issue should return to the Interim Finance Committee, which meets again May 18.

At the Interim Finance Committee meeting Wednesday, Kieckhefer asked whether the Board of Examiners had specified how much of the Rainy Day Funds they intend to transfer.

Brown said they hadn’t agendized a specific amount.

At another point in the meeting, Brown also mentioned that a special session is being considered. No other references were made to a possible special session, which many feel is inevitable to address future fiscal years.

The Legislature is not scheduled to meet again until 2021.

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April Corbin Girnus
April Corbin Girnus

April Corbin Girnus is an award-winning journalist with a decade of media experience. A stickler about municipal boundary lines, April enjoys teaching people about unincorporated Clark County. She grew up in Sunrise Manor and currently resides in Paradise with her husband, three children and one mutt.