Guinn says $700 million minimum needed for coming two years | NevadaAppeal.com
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Guinn says $700 million minimum needed for coming two years

by Geoff Dornan, Appeal Capitol Bureau

Gov. Kenny Guinn said Wednesday the state needs a minimum of $700 million in additional revenue just to maintain the status quo for the coming two years.

But he said that’s all it will do.

“That does not portend anything for the future of the state,” he said. “If this is all we do, we will remain a very financially fragile state.”

During a news conference, Guinn refused to discuss what taxes he plans to raise. He also declined to say how much more than the $704.6 million he will ask for in his budget.

Guinn made it clear he doesn’t intend to ask as much as the $1.4 billion his campaign manager Pete Ernaut mentioned in an earlier interview. However, he is expected to seek more than $1 billion to not only meet current needs, but provide the state enough revenue to meet future needs.

Guinn has said repeatedly Nevada has a “systemic problem” in that its existing tax system doesn’t grow as fast as the state’s needs. And he has promised to present a plan to fix that problem.

Asked about members of the Legislature who say the state has a spending problem, not a revenue problem, he said, “To me, they’re irrelevant.

“If you don’t have any additional revenue coming in, then we’ve got a lot of programs to cut out,” said Guinn. “Those who would vote against any increase, I think they will have a difficult time getting re-elected.”

The shortfall for the coming two-year budget cycle was originally more than $100 million higher than the figures Guinn presented Wednesday — probably near $900 million. But he and his staff have since lowered the projected growth rates for kindergarten-through-12th-grade education, the university system and Medicaid while predicting the number of welfare recipients and the prison population will decline.

If any of those projections turn out low during the next two years, they could cost school districts, the state and university system millions more.

Even so, Guinn said it will cost $311 million more to cover the growth in public schools and $90.6 million more for the university system. He said Medicaid will cost about $78 million more and welfare benefits $65 million more than this year’s budget.

Most agencies, he said, were ordered to ask no more than their current budget for each of the next two years but caseload growth and rising utility and other costs will still add about $81 million to the total.

Benefit costs, group insurance and other uncontrollable costs, he said, account for most of the rest.

But the $704.6 million shortfall does not include more than $50 million in ongoing costs to the university system now paid by the estate tax or any money to replenish the $100 million Guinn wants to take from the “rainy day fund” to cover this fiscal year’s shortfall.

He said he still has to do something about both those problems before finalizing the budget.

However, those totals include the $2,000 signing bonus for new teachers and 2 percent pay raise for teachers Guinn promised to put in the budget two years ago. He said this is the only pay raise in his proposed budget.

The only good news, Guinn said, is Nevada will get an increase in the percentage of support it receives from the federal government for Medicaid — generating a total of some $90 million over the next two years.

“It’s good news, but it’s terrible news,” he said pointing out that the state gets that boost because its per capita income is dropping in comparison to other states.

Guinn said he will lay out his proposed budget, including tax and fee increases to pay for it, in his State of the State address Jan. 20.