Plenty budget challenges, still no details from Sandoval

Despite facing a budget deficit approaching $2 billion for the coming biennium, Gov. Brian Sandoval this week refused to give any indication how he will deal with the situation.

Sandoval said he still wants to restore the pay and benefit cuts taken from state workers over the course of the six-year recession.

“State employees are a priority,” he said. “That’s something I want to try finish.”

He said adding funding to K-12 education is also a priority.

But he refused to give any details of how he will meet those goals saying he’s waiting for final agency requests and the Economic Forum projections before laying out a final budget plan.

“With that information, I will be able to make a final decision on the budget,” he said.

The holes in the budget begin with whether or not Sandoval will extend the temporary tax increases and revenue shifts that produced $1.2 billion to balance the current two-year budget.

There’s also a huge increase needed to meet increased Medicaid costs caused by the enrollment from the Affordable Care Act. His chief of staff Mike Willden estimated in June that could add as much as $400 million to the budget, more than a third of which — $120 million — would have to be paid by the state.

On top of that, the federal government in 2017 will no longer pay 100 percent of the Medicaid costs for “newly eligible” enrollees made eligible by Obamacare. Four years after that, the state will have to cover 10 percent of those costs.

Sandoval also said he wants to increase funding for K-12 education. He said education has been his No. 1 priority since he took office.

But he refused to discuss where that money will come from. At the same time, the state is already facing a shortfall in meeting its current obligations to fund education because county enrollments — especially in southern Nevada — are coming in above budgeted projections. Clark County’s shortfall in 2014 will force the state to move money from this fiscal year to backfill that nearly-$30 million shortfall. This year will be at least another $30 million short and that cost will continue into the coming biennium.

It will likely take well over $60 million to cover increased costs in Clark County alone. Meanwhile, Washoe, Carson City and other areas have also seen enrollments increase above what was projected this budget cycle and those new students won’t just disappear next year.

“We do have a plan,” he said. “We are working on a plan to fund education in the state of Nevada.”

Among those discussions, he said, is how to revise the funding formula for K-12 education. The state has used the same basic formula for dividing up funding to the 17 school districts since 1968 and Sandoval said it’s time to take a long look at it.

But he said one concern is to make sure rural counties “are held harmless in all of this.”

As for details, he said that will wait until his State of the State speech to the 2015 Legislature in February.

Until then, he said, “it’s a process.”’

In addition to Medicaid, Sandoval conceded there are a number of cost increases the state must fund including staffing for Stein Hospital — the new and expanded mental patient facility in southern Nevada. Opening that hospital, he said, will ease the pressure on emergency room beds — particularly at University Medical Center in Las Vegas.

He said the state got some in covering mental health care costs when the federal government agreed to double reimbursement costs for those services to more than $900 a day. He said that will help convince more private hospitals to take those patients.

There are also inflationary cost increases such as the price of prescription medications and healthcare the state must pay for a wide variety of individuals including prison inmates and general increases in the cost of doing business, services and supplies that must be purchased.