In a party-line vote, the Interim Finance Committee authorized the transfer of $401 million from the state’s Rainy Day Fund into the state’s general fund.
The money is expected to fill some of Nevada’s budget shortfall, estimated to be between $741 and more than $900 million for the current fiscal year, which ends June 30.
In addition to asking state agencies in April to prepare for budget cuts, Gov. Steve Sisolak declared a fiscal emergency May 11 as a precursor to accessing the emergency funding.
The vote approving the transfer passed Monday 15-7 with every Republican lawmaker opposed. Assemblyman Jim Wheeler argued there needed to be more information on how the state plans to make cuts.
“I know everyone is going crazy. This is a true emergency,” he said. “But give us some idea other than, ‘We are looking at things and we’re going to be OK for fiscal year 20.’ Ms. (Susan) Brown said FY 20 is pretty much done, but as a member of this committee, and all of the members of this committee, should know how it’s done already before we start moving money over.”
The panel was not provided any details about specific budget cuts. According to the Governor’s Finance Office, those details are still being prepared.
“We are working through proposals put forth by state agencies and we will be coming forward with a plan … to capture those savings that have been identified by those agencies,” said Susan Brown, the director of the Governor’s Finance Office
Assemblywoman Maggie Carlton, the committee’s chair who noted she’s had to contend with the transfer of emergency funding more than once in her legislative career, said transferring the money was about funding state obligations.
“The state is moving its money from its savings account to its checking account to pay the bills,” Carlton said, responding to her Republican colleagues. “Everything you voted on and all the budgets you were involved in during the last legislative session, all those decisions that we made in a bipartisan fashion to fund the state is where the money from the Rainy Day Fund will be going. Knowing this won’t be enough to get there, that’s the part of the plan we need to still keep working on.”
Brown told lawmakers the state could run into a cash flow problem by the end of the current fiscal year that could affect the payments to the biggest budget lines in the general fund — Medicaid, higher education, and the K-12 education.
State Sen. Ben Kieckhefer pushed back on whether that meant draining the entire fund.
“I don’t question the ultimate need for this money to be used this fiscal year to help us come up with a comprehensive solution to our budget deficit,” he said. “The argument that we need to pay our bills doesn’t carry water when we have cash in the treasury to cover our bills.”
Multiple Republican lawmakers cited concerns that emptying out the entire reserve account would hurt Nevada’s overall bond rating. Some even suggested that instead of transferring the entire sum that the committee consider only using part of the money for the time being.
However, if they decided to authorize multiple transfers instead of one sum, Carlton said, they would have to go through another multi-step process before the Interim Finance Committee could vote.
“We know we’re going to need it,” she said. “Splitting it in two I don’t believe serves any purpose other than to slow it down and possibly cause more misinformation out there about what the state is doing with its Rainy Day Fund.”
Last week, the committee accepted more than $800 million in CARES Act funding for state and equally cash-strapped local government agencies. The state is granted some flexibility with respect to how to spend that money, leading some lawmakers to suggest using those funds rather than the Rainy Day Fund.
But Brown said it’s not that simple.
“The Rainy Day Fund dollars can be used to pay the state’s bills and the CARES Act could be used for cash flow,” Brown explained. “There are definitely parameters for how those (CARES Act) funds can be spent, and it has to be related to costs associated with COVID-19 and reacting and responding to COVID-19.”
During the meeting, Assembly Speaker Jason Frierson suggested the creation of a subcommittee to oversee how federal relief funds are being used. The Interim Finance Committee is scheduled to meet Thursday to discuss the proposal.