Bigger rainy day fund OK’d

CARSON CITY -- Assembly Speaker Barbara Buckley's bill to require state government to place money into a new rainy day fund was approved unanimously Wednesday by the Assembly.

"It makes no sense to build new programs only to kill them when times are tough," said Buckley, D-Las Vegas. "Let's be clear we are experiencing the great depression. No rainy day fund will insulate us from times like this."

But a substantial rainy day fund will protect primary state programs from cuts in future recessions, she said.

"The economy eventually will recover," Buckley said following the vote.

But lawmakers should not forget the current budget crisis and must take steps now to reduce the hits state agencies would take in the future, she added.

Under her Assembly Bill 165, the state starting in 2011 must place at least 1 percent of expected general fund revenue into a bank account for future emergencies. That would be about $58 million if the bill had been in effect today.

Then if there are any surplus funds remaining after budgets are approved, the first 5 percent of the extra funds would be used to cover the required ending fund balance in that budget.

Another 2 percent would cover unpaid bills and 40 percent of the remaining money would be put in the new rainy day fund.

If the proposal had been in effect in 2005, the year state government had an estimated $700 million surplus, then more than $300 million would have been banked.

That was the year that $300 million was rebated to taxpayers at the request of Gov. Kenny Guinn and legislators of both parties.

Under Buckley's bill, Nevada state government could build a rainy day fund of as much as 20 percent of its annual expenditures, or $600 million to $800 million. That would be the largest percentage set aside for such stabilization funds in the country.

State government had accumulated a $267 million rainy day fund by the middle of 2008.

All this money was spent during a special legislative session when the state fell into recession and tax revenue dropped.

In a floor speech, Buckley noted that money in the past had been placed in the rainy day fund voluntarily by the Legislature. Her bill, in contrast, would mandate putting money in the fund, even in hard times.

Assembly Minority Leader Heidi Gansert, R-Reno, supported Buckley's bill in a floor speech.

"We all agree we need to save more money," Gansert said. "We have not put enough into our saving account for hard times like this."

After the vote, Gansert noted she has produced her own rainy day bill that is "more aggressive" than Buckley's plan. Under her bill, as much of 50 percent of any surplus would be placed in the rainy day fund.

With Assembly approval, Buckley's bill now goes to the Senate for review.

Contact Las Vegas Review-Journal Capital Bureau Chief Ed Vogel at evogel@ reviewjournal.com or 775-687-3901.