With state budget shortfall estimates ranging from $741 million to more than $900 million for the current fiscal year, Gov. Steve Sisolak took the necessary first step Monday toward reaching into the state’s Rainy Day Fund.
In a statement released by his office Monday, Sisolak also said he is working with legislators on budget decisions, “including the timing of any potential special session” of the Legislature, which is currently not scheduled to meet again until early next year.
The governor Monday declared a “fiscal emergency,” a prerequisite to him and the Legislature’s Interim Finance Committee to transfer money from the Rainy Day Fund to the state’s general fund. The Interim Finance Committee is scheduled to meet Wednesday.
About $400 million is in the state’s Rainy Day Fund. A Tax Foundation analysis last month found that at 9 percent of general fund operating expenditures, Nevada’s fund is slightly larger than the 8 percent median for all states in fiscal 2020.
The statement from the governor’s office Monday said in addition to the Rainy Day Fund, the state will be rely on “reserves from state agencies budgets that the Governor asked agencies to identify early last month” — budget cuts.
Sisolak in April asked state agencies to prepare for potential budget cuts of 4 percent in fiscal year 2020, which ends June 30, and up to 14 percent in FY 2020. A 4 percent cut from the FY2020 $4.37 billion general fund budget would be about $175 million.
The largest items in FY2020 general fund appropriations are Health and Human Services, which includes Medicaid spending ($1.34 billion), followed by the main fund for K-12 education ($1.17 billion), and the higher education system ($685 million).
The CARES Act passed in March included $150 billion for state and local governments, of which Nevada’s share was $1.25 billion. Democrats who control the House are expected to unveil a “CARES 2” bill later this week. Though still being drafted, the legislation could reportedly include a trillion dollars for state and local governments.
There is bipartisan interest in providing financial assistance to states in another federal relief bill. Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are pushing a proposal that would provide a minimum of $500 billion to states. But many Republicans in the GOP-controlled Senate, including Majority Leader Mitch McConnell, have balked at providing further assistance to states.