Buckley urges lawmakers to beef up Rainy Day Fund
Nevada must create a mandatory savings program to get the state through tough times, Assembly Speaker Barbara Buckley, D-Las Vegas, told the Ways and Means Committee Monday.
“Creating programs in good times to destroy them in bad times makes no sense,” she said, urging support for AB165.
She said the current Rainy Day Fund helped significantly last year, providing $267 million to stave off more severe cuts to the 2007 budget. But it wasn’t nearly enough to smooth out the economic rollercoaster Nevada has been on since then.
“The current Rainy Day Fund does not do the job,” she said. “And it relies primarily on voluntary legislative contributions.”
Her proposal, she said, would put more money in a savings account when revenues come in higher than projected. Under existing law, the state’s ending fund balance can build a cushion of 10 percent more than the statutory minimum. Forty percent of any money over that goes to the Rainy Day Fund. The rest stays in the treasury.
Buckley’s plan would also bank money up front each budget cycle. It would mandate that the governor and Legislature start the budget process by setting aside 1 percent of the revenue projected by the Economic Forum for the emergency fund.
This budget cycle, that would have forced the state to set aside $57.7 million before Gov. Jim Gibbons started building his proposed budget.
AB165 also raises the cap on how much money can accumulate in the fund from 15 percent of the General Fund to 20 percent.
She said when actual revenues fall 5 percent below the amount projected and used in the budget, the governor and Interim Finance Committee could access it. Existing law says that decision is made by the governor and “leadership.”
“This brings more lawmakers into the process,” she said.
Buckley said not even these changes would have saved the state this year.
“But it can reduce some of the boom-and-bust cycles,” she said. “Every 10 years we have a bust cycle.”
Ways and Means Chairman Morse Arberry, D-Las Vegas, questioned language that would have required the state to give up 1 percent this year, saying it would make the cuts facing the 2009 Legislature even tougher. But Buckley said lawmakers could simply take it back out.
Buckley’s plan was backed by the university system as well as the Reno and Las Vegas chambers of commerce and Lt. Gov. Brian Krolicki, who said he supported a similar concept while state treasurer.
Executive Vice Chancellor Dan Klaich of the university system said regents and the chancellor’s office strongly support the concept, “having been in the position of being the budget balancer, as it appears this session.”
Gibbons’ proposed budget hits the university system with a 36 percent overall General Fund reduction.
The committee took no action on the bill.
Contact reporter Geoff Dornan at email@example.com or 687-8750.