FILE - In this March 17, 2020, file photo, people wait in line for help with unemployment benefits at the One-Stop Career Center in Las Vegas. Nevada is fast-tracking the hiring of temporary unemployment office workers to deal with a wave of benefits claims that followed the mid-March closure of casinos and other businesses in response to the coronavirus pandemic. Gov. Steve Sisolak said Monday, May 11, 2020, that letting the state Department of Employment, Training and Rehabilitation hire contractors and rehire retirees or former employees to process claims alongside regular state workers should help get insurance benefits more quickly to more out-of-work Nevadans.
Gov. Steve Sisolak on Monday declared a state of fiscal emergency, saying the pandemic that forced him to shut down most of the economy has crippled the state’s revenue stream.
That action will give him and the Legislative Interim Finance Committee access to Nevada’s Rainy Day Fund, which now contains just about $401 million.
But Sisolak still hasn’t called for a special session of the Legislature.
“I will continue to work closely with our partners in the legislative branch on these decisions, including the timing of a potential special session,” he said in a statement.
He said they knew the state would face a serious revenue shortfall because of the closure of Nevada businesses including the gaming industry.
He said estimates by the governor’s finance office and the legislative fiscal division project a shortfall between $741 million and $911 million this fiscal year which ends June 30, less than two months from now. He said because of that shortfall, “the state is now in a position where we will be forced to make very difficult decisions.”
“I’m glad the governor declared a fiscal emergency,” said Sen. Ben Kieckhefer, R-Reno. “We’re in one.”
Sisolak asked state agencies for 4 percent budget cuts that would total about $172 million.
“He asked those a month ago,” said Kieckhefer, the senior member and former chairman of the Senate Finance Committee. “He has not yet done anything to act on them. He hasn’t done anything to curtail spending.”
Kieckhefer said in addition to the Rainy Day Fund, the state has a projected $160 million or so surplus in the General Fund above the mandatory 5 percent Ending Fund Balance in the treasury. That too, he said, will go away. He said the state can also get some funding by cancelling certain capital improvement projects and other one-shot expenditures.
A big chunk of that estimated shortfall is the loss in local revenue to the Distributive School Account that pays for K-12 education. That revenue depends heavily on sales taxes just as the state General Fund does. The point there is that state statute requires the state to make up any shortfalls in the Local School Support Tax and other school district revenues.
“We’re required to make them whole,” said Kieckhefer.
One temporary solution, he said, would be to move fiscal 2021 school funding back to cover this fiscal year’s shortfall.
But he said that would create a much larger hole in the fiscal year starting July 1.
“Transfer the DSA money, spend down the Ending Fund Balance and the Rainy Day Funds and we’re still in the red,” he said. “We’re still about $80 million below the 5 percent Ending Fund Balance.”
He said the governor may be able to avoid a special legislative session in the six weeks or so left in this fiscal year but that he can’t possibly avoid in the coming fiscal year.
And most importantly, he said the governor and his administration have to act now.
“The problem is real and they need to take some actual action to address it,” he said. “We can’t analyze this forever; we’re on the clock.”
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