Gibbons to officially call for special session
Gov. Jim Gibbons said Thursday he will issue a proclamation calling the Legislature into special session Monday.
The purpose of that session will be to deal with the remaining $331 million shortfall in the budget for this fiscal year.
He said the proclamation would be issued at 10:30 a.m. today, but declined to give any details of what the plan contains. He said he has given his word to legislative leaders in both the Senate and Assembly that they would have the opportunity to brief their caucuses before releasing the details of how the shortfall will be addressed.
“I think we’ve got a consensus approach,” Gibbons said.
The largest single piece of the plan is a $160 “line of credit” from the Local Government Investment Pool which opponents have called a loan and charged that would be the first time Nevada government will run on borrowed money.
Contrary to what those opponents believe, the plan to balance this year’s state budget with a loan is anything but new to Nevada.
According to State Archivist Guy Rocha, Nevada lawmakers and governors have done so repeatedly in the past ” just not in recent years.
Legislative Council Bureau Director Lorne Malkiewich said Nevada’s Constitution does require a balanced budget but he said it’s a myth that the state is constitutionally barred from using bonds or loans to balance revenues and expenditures.
The issue was raised after Treasurer Kate Marshall suggested the state take a line of credit against the LGIP, which her office invests on behalf of Nevada’s counties and municipalities. She said the purpose of the line of credit wasn’t to act as a loan but a hedge against the state’s General Fund falling too low. She said it was for cash flow purposes only and that the state should only take what it needs to maintain a positive checking account balance.
But lawmakers and the governor are expected to use the entire $160 million to reduce the shortfall.
The first time a loan was used to balance the state budget, Rocha said, was in 1881 when lawmakers and the governor imposed a state property tax ” 10 cents for every $100 of assessed value ” to help cover operating costs of government.
They did the same again in 1887 and 10 more times between then and 1907.
But Rocha said those were all in general legislative sessions to cover state budget costs in advance.
He said the example which mirrors this year’s budget situation perfectly in the special legislative session of February 1912 which was called by Gov. Tasker Oddie to cover a budget shortfall.
In his message to the Senate and Assembly, Oddie said he was calling the special session to “relieve the following conditions in the fiscal affairs of the state, namely: That the General Fund in the state treasury is exhausted and that, to enable the state to transact its business on a cash basis, provision must be made by the Legislature to borrow a sum sufficient to meet the emergency until such time as the state revenues can be adjusted to balance expenditures.”
The cash balance of the General Fund on January 1 of that year was just $44,514.
That was also the last time a loan was used to cover operating expenses of state government, according to Rocha.
The special session, which lawmakers hope will only last two days, was planned after legislative leadership and Gibbons agreed on a plan earlier this week. The final details were worked out while Gibbons was at the National Governor’s Conference meeting. He was briefed on the final details when he returned.
Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.