State could generate $30 million windfall
One time only, Treasurer Brian Krolicki says, he may be able to generate as much as $30 million to help cover the state’s revenue shortfall.
Gov. Kenny Guinn will tell the Legislative Interim Finance Committee on Wednesday about the savings from the treasurer’s office and another $30 million in savings amassed by the budget division.
Those, according to Guinn, will go a long way toward making up an estimated $100 million budget shortfall facing Nevada this fiscal year.
Krolicki was still working on the details, but as much as $10 million could come from the consolidated bond redemption fund — the holding account for money the state uses to pay off bonds.
Krolicki said excess interest and other revenues have built up in that fund over a period of years and that the money should be transferred back to the state’s general fund.
The rest would come from a complex deal under which the state would “sell” its property tax revenue, collected to pay off bonds, to a private investment firm. The benefit to the state would be that the private company would pay the state up-front for the rights to receive the state tax revenues.
Krolicki said the private company would then have the right to invest the state’s money and, after making the bond payments, keep anything extra as profit.
He said private investment firms can make a higher return on invested money because they aren’t restricted in the types of investments they can use. It’s illegal to put state funds into some of the more profitable but riskier types of investment instruments.
With the cash from the bond investment account, Krolicki said, the total could be $30 million.
Guinn has already laid out about $30 million in savings. The largest piece is $9.4 million discovered in an account at the Department of Motor Vehicles which had not been properly transferred to the general fund.
In addition, sales tax revenues came in $5 million above projections last year.
But the bulk of the savings has come from cutting spending. The state has been saving more than $1 million a month through its hiring freeze, a number of new programs have been delayed and some one-time expenses put off to save money.
Guinn and Director of Administration Perry Comeaux plan to lay out other cost-cutting and revenue generating measures they have implemented or are planning when they discuss the state’s financial situation with lawmakers Wednesday.