Guinn proposes 2 percent raise each year for state workers, teachers

Although Nevada's statutory spending cap will strictly limit what the state can do with its revenue surplus this coming budget cycle, Gov. Kenny Guinn said Friday he plans to use some of it to provide raises for state workers and teachers.

Nevada has had a law since 1979 limiting the growth of state government spending to no more than population growth plus inflation. Because of the state's rapid growth - fastest in the nation for the past 18 years - the budget has never come close to that cap.

Until this year.

Now, he said, the state is looking at restrictions not only on what it can do with the estimated $350 million surplus this fiscal year but on the revenues expected for the next two year budget.

For the coming two-year budget cycle, Guinn said, the latest projections will cap the state budget at $6.94 billion. While that is $1 billion higher than the current two-year operating budget, he said almost all of that amount will be taken by inflationary and growth-related increases in the cost of existing services and programs.

It will take an estimated $243.6 million more to cover growth in public school enrollments and nearly $71 million for growth at the university system.

But the most explosive increases, he said, are in medical costs - including not only the cost of public employee benefits but Medicaid and other health costs borne by the state.

"Everything else is single digit. Health-care costs are double digit," he said.

When projected increases in state worker and teacher benefit costs, Medicaid growth and medications the state provides are deducted from the remaining revenues, a balance sheet prepared by the state budget office estimates there will be $336.6 million in available funding for the 2008 and 2009 fiscal years.

That is the money he said will be available to create or expand ongoing programs.

Guinn's tentative spending plan would put $210 million of that into raises for state workers, teachers and university employees. He said that would provide a 2 percent raise in fiscal 2008 and another 2 percent in fiscal 2009.

That would leave just $126.6 million to pay for other needs over the next two years and Guinn said mental health programs "need a lot of this money." He and Human Services Director Mike Willden said mental health services need funding to cover double-digit inflation and to staff and operate the new mental health hospital. Willden said Medicaid providers also need substantial increases to cover rising costs.

For this fiscal year, the state is just $179 million below the cap, according to Director of Administration Andrew Clinger. Legally, the $171 million in the state treasury over that amount can only be used for four things: Highway construction, capital construction, the state's rainy day emergency fund or for a rebate to taxpayers.

Guinn said two priorities he is considering for that money are prison construction and the extension of Interstate 15 north of the spaghetti bowl in Las Vegas. He said with the prison population growing rapidly, the state needs two more units at High Desert and a major women's prison project - each worth about $40 million.

The I-15 project, he said, would be about $100 million itself.

But he said those needs are critical to the state.

A substantial share of the $179 million under the cap, he said, will go to replenish various state emergency funds.

When everything is considered, Guinn said, there really isn't that much left over.

"A lot of people are saying we have all this surplus," he said. "I'll be glad to show them the numbers."

He said he would especially extend that offer to the candidates seeking to replace him this election cycle.

"They need to see these numbers."

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.