Legislative analysts estimate budget shortfall exceeds $333 million
Every time someone talks about the state’s budget shortfall, it gets bigger.
Six months ago, it was estimated at $100 million. Just a couple of weeks ago, Gov. Kenny Guinn’s staff estimated the shortfall at $275 million for the biennium.
But the Interim Finance Committee heard new and even higher numbers Monday — as much as $333.2 million by the end of fiscal 2003.
Budget Director Perry Comeaux said if general-fund revenues grow this year at the rates forecast by the Economic Forum and used to build the budget, the $275.4 million revenue shortage will rise another $30.5 million to $305.9 million. But that depends on sales taxes growing 5.8 percent and gaming tax collections by 4.5 percent.
Legislative fiscal analysts are using a more pessimistic estimate for gaming and sales taxes — 4 percent growth for each. And that results in an additional $27.3 million shortage, bringing the total to $333.2 million.
Comeaux said state revenues were expected to fall $83.6 million below what was budgeted for the fiscal year, which ended June 30. He said the state actually ended up in better shape than that — only $70 million below projections.
“Unfortunately, we did better on the gaming side than the sales tax side,” he said.
When sales tax revenues are short, he pointed out, “it’s a double hit” because that means the Local School Support Tax portion of sales taxes is also short and the state is legally required to make up that amount as well.
He said, however, he doesn’t expect the final revenue numbers next June to be “as bleak” as analysts predict.
Comeaux said most of sources to cover that shortfall already have been identified by the governor and his staff. The final piece of the puzzle, he said, is the 3 percent cuts in operating budgets state agencies have been ordered to make.
Comeaux said his staff received agency proposals for those cuts last week and that he will present them to the governor today.
Members of Interim Finance Committee questioned one part of the plan. The governor expects to make up fully $100 million of the shortfall by tapping the state’s Rainy Day Fund.
That fund, built up over the past decade, contains $136 million. Ways and Means Chairman Morse Arberry, D-Las Vegas, said he doesn’t want to touch that money if there is any other possible source because, then it wouldn’t be available for another emergency.
Comeaux, however, pointed the fund was designed for just this situation.
“The purpose of that fund is to preserve the best we can the services we provide,” he said. “You shave money off the top in good years to fill in the trough. We’re in a trough.”
“But when we pull the money out, how about we have a plan to put the money back,” said Arberry.
Comeaux said he completely agrees the governor and lawmakers should include plans to rebuild the emergency fund if they do tap it.