An almost $1 billion gap exists between what state agencies say they need and what Nevada's current tax system is expected to generate over the next two years.
State Budget Director Perry Comeaux confirmed Wednesday agency budget requests totaled $4.7 billion for the biennium -- even following Gov. Kenny Guinn's mandate agencies submit flat budgets with only unavoidable increases.
The economic forum Tuesday approved tentative revenue projections totaling about $3.8 billion for the next two fiscal years and served notice they're unlikely to go much higher when they finalize those numbers Dec. 2.
The $900 million difference doesn't include requests for new or expanded programs agencies say the state should implement.
"Of course, that will go down," he said pointing out that his budget division is reviewing and trimming those agency requests. "But it's still going to be considerable."
Guinn said many of those budget increases are unavoidable -- such as the estimated $225 million more it will take to provide teachers for 18,000 more students in Nevada public schools. And that is if the per pupil state contribution now set at $3,991 a year stays the same. Educators say that amount needs to be dramatically increased to improve the quality of education in Nevada.
In addition, it will take nearly $70 million to fund the 2 percent pay raises Guinn promised public school teachers 18 months ago.
Guinn said the university system is facing the same sort of enrollment growth and that just providing classes to those new students will increase the university budgets about $75 million.
Another $50 million in university costs now paid from the estate tax will also have to be absorbed by the state as the federal government phases out the tax.
Guinn said Medicaid is another place where the state can't avoid rising costs driven by caseloads.
Between education and Medicaid alone, he said, $500 million in new money will be needed. Other needs in human resources, prisons and other departments raise the total even higher.
The forum's preliminary projection is just $63 million more than the total revenues received in the current biennium. But Guinn said he and his financial advisors aren't really arguing with those projections: "They're about right where we've been looking."
He already has ordered millions in cutbacks and ordered agencies including the university system to absorb the costs of increased employee health-benefit premiums, higher utility costs and a good share of normal worker pay increases. He also has cut agency budgets 3 percent across the board, imposed a hiring freeze and delayed or blocked implementation of a variety of new and expanded programs approved by the 2001 Legislature.
Together the cuts will pretty much cover the expected $350 million shortfall caused by the economic slump and the impact of 9-11 on Nevada's sales and gaming revenues.
Guinn said his job is to build a tight but realistic budget. The difference between that and revenue projections, he said, is the amount he will have to ask legislators to raise in new taxes.