Forum reduces total revenues for budget
Nevada’s Economic Forum on Thursday decided to pull back the revenue estimates members approved a month ago, chopping $82.4 million from the total general fund money the governor can legally spend on the 2007-09 budget.
While that doesn’t seem like much out of the $6.94 billion in projected revenues, Budget Director Andrew Clinger said it will force either Gov.-elect Jim Gibbons or Gov. Kenny Guinn to make some changes.
He said the reduction won’t change proposed agency operating budgets. Instead, it will come off the top – the revenue the state expects to have over and above that cap.
Under the 1979 law, surplus revenue over the cap can be spent in just four ways: Roads and highways, new buildings, the rainy-day fund for emergencies or as a rebate to taxpayers.
The projected surplus was about $320 million. Guinn has proposed spending $170 million for highway projects – almost all in Southern Nevada, $110 million to jump start the university system’s proposed multi-campus Health Services Center plus just over $42 million for prison and other state building projects.
But after reviewing what the forum did Thursday, Clinger said that pot of money is now reduced to $236.5 million. And that, he said, means someone has to cut more than $80 million from the list.
He said the current budget proposes about $12 million more than legally required go into the rainy-day fund. Deleting that, however, still leaves a shortfall of about $70 million in the spending plan proposed by Guinn.
The Economic Forum, a panel of appointed, private-sector financial experts, was created a dozen years ago to bring order and logic to the process of estimating state revenues to use in building the biennial budget. State agencies have historically enjoyed a last-minute increase in projected revenues from the forum’s final meeting before the Legislature.
This time, however, projections had to be scaled back in large part because voters approved extension of the tax break allowing them to deduct the value of a trade-in vehicle from the cost of the new car before calculating sales tax owed the state. That will cost the state more than $11 million for the remaining seven months of this fiscal year and about $46 million more in the coming two-year budget cycle.
Other than that, the adjustments were relatively minor and mostly a result of forum members simply being conservative about whether Nevada’s economy can sustain growth rates at the high levels experienced over the past few years.
Overall, they reduced revenue projections about $11 million for the rest of this fiscal year, $29.4 million in fiscal 2008 and $42 million in fiscal 2009.
The forum projected general fund revenues for the coming biennium will total just over $6.92 billion. Although lower than executive branch officials had hoped, that is still a billion more than the current budget cycle which was projected at $5.93 billion.
While the governor must use Thursday’s projections to build his proposed budget, the Legislature will get one final shot at a bigger number when the forum meets again May 1 to adjust the numbers. That meeting, coming with a month remaining in the legislative session, normally gives lawmakers a bit more money to spend.
But, for the first time in 27 years, since the cap was enacted, they will be bumping up against the statutory cap which limits growth of the state budget to inflation plus population growth. That cap will be $7.065 billion for the 2008-09 budget cycle.
While the governor must follow the cap, lawmakers can exceed it if they deem it necessary.
• Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.