Special session: Assembly warned about unclaimed property plan
The Nevada Assembly was warned Saturday about the potential fiscal dangers of pledging unclaimed property fund money for a one-time payment of $90 million to help balance the budget.
“This is a payday loan to the state,” said Treasurer Kate Marshall.
The plan, introduced by Republican Assembly members and pushed by Lt. Gov. Brian Krolicki, would pledge up to $10 million a year from the unclaimed property fund to pay off a loan of anywhere from $60 million to $120 million during the next 20 years.
Asked if that scheme could harm the state’s credit rating, Marshall said it could.
“Credit agencies look at that and say that’s not so good,” she said. “You’re talking about taking 20 years of unclaimed property revenues and bringing it home today.”
She said using the unclaimed property plan could be another negative that might eventually lead to a lowering of Nevada’s bond rating.
Krolicki said before the meeting started that he was on the verge of getting the securitization he has wanted to do since he was treasurer 10 years ago.
At that time, he proposed doing the same with the tobacco settlement money – an idea lawmakers rejected in three different legislative sessions.
He told the Assembly that, whether it decides to use the unclaimed property securitization – similar to a bond sale – or not, they should change existing statutes to allow them to do so if needed.
He admitted the concept is not the best way to do business.
“But of all the options out there, this is probably the least ugly,” Krolicki said.
The Assembly GOP caucus offered the plan as a way to generate about $90 million to lower the budget shortfall. Minority Leader Heidi Gansert, R-Reno, and Krolicki both argued unclaimed property is a consistent revenue generator the state can rely on to make payments on that loan.
The Assembly took no action on the proposal. The proposal was one of the things being debated in the closed door session after lawmakers met Saturday.