‘Budget cuts’ and ‘declining revenues’
Over the past 13 years, no state government has grown faster than Nevada’s. General fund spending has tripled since 1994, from $1.023 billion to more than $3 billion this fiscal year.
Appropriations being considered by the 2007 Legislature will do nothing to knock the Silver State from its big-spending perch. In fact, when lawmakers pass a general fund for the coming two years sometime this June, the budget will grow an additional 16 percent to an estimated $3.4 billion in 2009.
On top of this increased spending, lawmakers have some $400 million in surplus revenue at their disposal. Most of this money will be spent on so-called “one-shot” construction projects, including some improvements to Interstate 15 near downtown Las Vegas.
Yes, the political class is still living large in Carson City, wading through revenue streams that just keep growing, and growing, and growing …
And yet, many people in state government are crying about “budget cuts” and “declining revenues.” They’re making the 2007 legislative session out to be worse than 2003, when lawmakers and Gov. Kenny Guinn created a constitutional crisis by involving the state Supreme Court in a dispute over tax increases supposedly needed to prevent the Nevada from falling off a fiscal cliff
The front page of Friday’s State Democratic Party Newsletter (also known as the Las Vegas Sun insert) sounded the alarm with the headline “Enough already with the cuts to colleges.” The partisan report lamented that Republican Gov. Jim Gibbons had issued a “warning that state government brace for across-the-board budget cuts” and that vital state operations were “left on the butcher’s block.” Curiously, the article offered no dollar figures to back up its talking points.
In Tuesday’s party newsletter, the second paragraph of the lead story quoted Assembly Speaker Barbara Buckley, D-Las Vegas, as saying: “It seems unlikely that any tax breaks will be passed this session in view of declining revenues.”
These graduates of the Al Gore College of Doomsday Rhetoric didn’t do well in math class. Their spending spin refers to a request from Gov. Gibbons for most state agencies to suggest minor cuts in their requests for spending increases.
When the legislative session began, state agencies, lawmakers and Gov. Gibbons believed about $6.8 billion was available to spend over the next two years. Now the state’s economic forecasters, whose recommendations are binding for lawmakers, are suggesting the state’s tax structure will generate about $6.7 billion in revenue, requiring about $112 million in reductions to budget increases.
“This isn’t a decrease in funding,” said Gov. Gibbons’ spokeswoman, Melissa Subbotin. “It’s a decrease in the increase.”
Indeed. Nevada’s higher education system is in line for a healthy budget increase, not to mention $110 million in surplus revenue headed toward a new health sciences center in Las Vegas. But system officials have been asked to trim about $30 million from their request for new funding. Once those reductions are made, the two-year higher education budget should still amount to about $1.3 billion, up 13 percent from the previous budget.
“The impact on our economy and literally our future is predictable, obvious and dire,” system Chancellor Jim Rogers wrote in a memo to Gov. Gibbons in which he refused to reduce his requested increases. “For my part, I will not be the chancellor who offers up this destruction.”
Nevada Supreme Court Chief Justice Bill Maupin is insistent that no further “cuts” in his requested spending increases can be made, writing in his own memo to Gov. Gibbons that the judicial system “has exceeded its participation in the effort to reduce the general fund appropriations.”
Goodness. One would think that revenues really are declining. You know, meaning there’s less money flowing into the state treasury. Meaning Mr. Rogers and Mr. Maupin had to submit budgets that were smaller than their previous ones.
Of course, that’s not the case. Everything is looking up in Carson City. Revenues are up. Spending is up. There’s more for everyone.
That’s not necessarily a good thing for Nevada. If government growth continues to outstrip the expansion of the private-sector economy, eventually both will stall. Then the shrill cries of “budget cuts” and “declining revenue” might actually be true.