State agencies have filed proposed budgets with the Governor’s Office that would require $9.5 billion in General Fund cash and a total of $27.5 billion for the coming two years spending cycle when all revenue sources are added together.
That is a significant increase over the $8.1 billion current General Fund budget and this cycle’s total spending of $22.76 billion.
The problem agencies will face is that there won’t be anywhere near that much new money to spend. The Economic Forum is expected to project an increase in General Fund revenue of about $500 million to $600 million over the biennium.
The agency requests are just that, requests based on what the agencies see as unavoidable cost increases combined with enhancements each agency feels it needs to do its job and a few items best described as a wish list. A sizable percentage of those requests won’t make it into the final proposed budget that Gov. Brian Sandoval’s successor will submit to the 2019 Legislature.
The agencies have requested just over $1.1 billion in enhancements, euphemistically referred to as “Items for Special Consideration.” More than half that total is from the Department of Health and Human Services.
While a number of HHS budgets are up because of caseload growth and inflation, the big driver is Medicaid, the largest budget in state government. The proposed Medicaid budget is $8.59 billion, $1 billion more than the program’s current budget. That is a combination of caseload growth and 3.4-4 percent medical inflation.
While most of that cost is borne by the federal government, the state’s share of Medicaid costs is also on the rise. The federal government is reducing the percentage it pays for the “newly eligibles” under the Affordable Care Act. It was 100 percent five years ago but will be 90 percent by 2020.
In addition, the federal match for general Medicaid clients, currently 65-35, is going down under the formula that reduces the federal match as personal income in a state rises. While the percentage change is likely very small, every percent reduction costs the state millions.
The proposed budget calls for $1.79 billion in state Medicaid funding, an increase of $406 million.
Health and Human Services programs will consume $11.9 billion under the proposed budget, just over $3 billion of it General Fund money.
The other major increase is in the funding sought by the Nevada System of Higher Education budget. NSHE is proposing a total budget of $2.37 billion for the coming biennium, a $544 million, 30 percent increase over the current budget. Nearly all of that increase, $478 million, would come from the state General Fund.
The list of requests includes $19.1 million for professor “pay equity and compression” relief, $10 million of it General Fund, and $5.7 million to pay tuition for out of state athletic scholarships. It also includes funding for summer school for the first time.
K-12 education budgets also are on the rise, primarily because of increasing enrollment — especially in Southern Nevada. Even though the overall increase is just 1.3 percent, it’s expensive. State Sen. Ben Kieckhefer, R-Reno, said he was advised it will take $374 million in new money just “to keep the doors open.” That includes $126 million more to pay for the growth in enrollment and $164 million in salaries.
Within K-12, there is also a major increase for school safety funding — a total budget of $75.87 million for the biennium.
The Department of Corrections is asking for $743.7 million for the biennium, an increase of $54 million. More than $623 million of that total is General Fund.
In addition, the Public Employees Benefits Program has proposed a $1.72 billion total budget. That represents a $267.4 million increase over current spending and the primary reason is the rising cost of healthcare.
The Judiciary is basically asking for a 15 percent increase in General Fund money and an 8.9 percent overall increase. The General Fund takes a bigger hit to offset projected decreases in assessment revenue from fewer and smaller fines levied by courts statewide — primarily traffic tickets. The list of requests includes the additional $3 million sought by the Advisory Commission on the Administration of Justice to beef up specialty courts.
The total judicial branch request is $139.9 million. The General Fund would bear $12.3 million of the $16.9 million increase.
The Legislative Branch was the odd man out this cycle, submitting a total budget request of $79.87 million. That is 2.14 percent less than the current legislative budget.