Thanks Biden. (White House photo)
When Joe Lombardo is inaugurated as governor next year, he’ll enjoy perhaps the rosiest budget scenario ever inherited by a new Nevada governor.
At $11.4 billion, state government revenue over the two-year budget period that begins in July 2023 is officially projected to be more than $2 billion larger than the budget approved for the biennium that began in 2021.
The revenue forecast approved this week by the state Economic Forum is even $600 million more than state agencies have asked for in their combined budget requests.
Presumably some of those agencies would like a do-over. Presumably some of them will try.
And for good reason.
Nevada’s rosy budget scenario notwithstanding, Nevada has always been a cheap state. An enhanced revenue picture won’t be enough to reverse the state’s age-old failure to meet its obligations to the public as evidenced by perennially ranking at or near the bottom of education spending, mental health infrastructure and access, and other lists too numerous to mention. Unfortunately, Nevada’s tax structure is built to avoid political discomfort, not fix stuff.
Alas, Lombardo will have his own ideas about what to do with Nevada’s improved financial situation – sending public money to private schools to benefit relatively few families and calling it school “choice,” perhaps.
When the legislative session starts in February and for the ensuing several months, we’ll get to watch Lombardo, legislators, and the lobbyists for which they stand scratch and claw and connive and canoodle over who gets to do what with the state’s windfall. Yippee.
In the meantime, we should remember the state’s plumpy budget is not some accident, and was by no means inevitable.
Two years ago when the Economic Forum signed off on projections for the budget cycle we are in now, the prognosis for Nevada’s economic recovery was grim. The state had raided its rainy day fund and slashed hundreds of millions of dollars from public services, and more slashing of services looked unavoidable … unless Joe Biden and the Democrats in Congress passed the American Rescue Plan Act.
Which Biden and the Democrats did, in March of 2021. Without a single Republican vote.
A little more than a year later, Republicans, including Lombardo, would be attacking Democrats for effectively overheating the economy.
When the American Rescue Plan Act passed, it was clear that it would, well, rescue state-funded public services from more debilitating budget cuts in Nevada and other states. Everyone, including members of the state Economic Forum, knew the most consequential developments by far during the 2021 Nevada legislative session would have very little to do with decisions made by Nevada lawmakers, and everything to do with Biden and Congress.
But rescuing state budgets is not the same as rescuing GDP, job growth, or wage growth. There were broad expectations that the economy would rebound, eventually. But few economists, and few normal humans, expected the economy to recover as quickly, let alone as ferociously, as it did.
Two years ago, Nevada’s economic forecasters didn’t, instead envisioning a sluggish recovery.
“If any of us had come into the last meeting back in December of 2020 or May of 2021,” a state fiscal analyst reminded forecasters in October of this year, “and said that we would have consecutive months of gaming win above a billion dollars per month, or taxable sales would be growing by double digits, or that inflation would be where it has been, I don’t know if any of those forecasts would have been taken seriously.”
Argue if you like about the fundamental causes of inflation and high gas prices, and by all means lament myriad other economic inequities and problems, many of which were brought into much sharper relief by the pandemic.
But also remember how agonizingly slow and painful the recovery was after the Great Recession – a recovery so slow that Nevada still hadn’t fully rebounded by the time the pandemic hit.
Biden and Democrats were adamant that they would not pass a recovery plan that was too small and too targeted toward tax cuts – the flaws in the Obama recovery plan.
Instead, Biden and the Democrats passed a giant plan that kept people afloat, kick-started the economy, and will continue to make the economy stronger over the long term.
Lombardo’s statement in response to this week’s glowing Economic Forum projections can be distilled into three words: No new taxes.
But while basking in the glow of Nevada’s flush budget, there are another three words Lombardo should say: Thanks, Joe Biden.
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