Budget shortfall grows; stimulus funds reviewed

Amid warnings that a state budget revenue hole is getting bigger, lawmakers on Monday reviewed the nearly $1.5 billion in federal stimulus funds coming to Nevada and asked for details on how it actually will help the budget.

Members of the Assembly and Senate Commerce and Labor committees discussed the stimulus funds with various state agency officials, representatives of U.S. Senate Majority Leader Harry Reid, D-Nev., and others.

Preliminary staff analyses have indicated that only a third of the stimulus dollars can go into the state general fund for education and Medicaid, while the state budget shortfall has been pegged at $2.4 billion " and growing.

Prior to the stimulus fund discussion in the Commerce and Labor committees, state Budget Director Andrew Clinger said the Gibbons administration is working on a plan to handle an increase of up to $100 million in the projected revenue shortfall. That would push the total to about $2.5 billion.

Clinger said during an Assembly Ways and Means Committee hearing that revenue projections for the coming two fiscal years could get worse by the time they're updated by the state Economic Forum on May 1.

Assembly Speaker Barbara Buckley, D-Las Vegas, said budget committees hope to close some agency budgets within two weeks and by then she wants Clinger to spell out administration plans for dealing with more declines in expected revenues.

A key shortfall element is a reduced estimate in room tax revenues to be collected in the Las Vegas and Reno areas, under a plan expected to win final approval from lawmakers. That accounts for two-thirds of the possible $100 million shortfall increase. The rest comes from Gov. Jim Gibbons' decision last week to withdraw a plan to speed up tax collections on casino markers.

"The room tax projections given by the governor's office widely missed the mark. Even from the numbers he gave us last week, they seem to be wrong by millions of dollars," Buckley said. "There are some mistakes that were made in the budget which causes again shortfalls of millions of dollars. So we also need to redo that to ascertain how we proceed in securing a balanced budget."

In related action, Gibbons announced formation of a working group made up of various state agencies plus K-12 and higher education representatives to coordinate receipt and use of the stimulus funds.

The Legislature was asked to be part of the group but declined. Gibbons was advised that the best people would be two fiscal analysts assigned to Senate and Assembly money committees, and they are needed at the Legislature.