Regents look at plans to offset end of estate tax

Wednesday, June 21, 2000 | 11:05 a.m.

RENO -- University regents can read the handwriting on the wall -- the days of the state getting a share of the federal estate tax are numbered.

Congress is considering abolishing or phasing out the tax, and Republican presidential candidate George Bush is pushing that in his platform.

If the proposal should pass, the loss of revenue could put a dent in the budget of the University and Community College System of Nevada, prompting regents to consider a transition plan to wean themselves off the estate tax revenue.

The 1999 Legislature authorized the university to spend $55 million from the fund for the present biennium. The university has $115 million left in the fund, which is replenished as wealthy Nevadans die.

The Legislature also uses the fund to pay part of the bill for class-size reduction in the primary grades.

"It's been a great boom for the system," said Regent Douglas Hill of Reno, chairman of the regents' subcommittee on the estate tax.

Regent Mark Alden of Las Vegas tossed out a "trial balloon" at a meeting Monday, offering "an idea that might be palatable to the governor and the Legislature."

Alden wants to set aside $100 million that can't be touched. The interest earned on the $100 million investment would be split. Half would be returned to the fund to build it up and the rest would be used for the university system.

"The state is headed towards major decisions on its finances and tax structure," Alden said, alluding to studies now under way by Gov. Kenny Guinn's administration.

"We're the brain trust ... we have the presidents and the academics ... they (state officials) should look to us to figure out the puzzle in the future," Alden said.

Hill suggested the system might want to keep $100 million as a "rainy day" fund, much as the state has an emergency fund to pull it through if tough times hit.

Most of the $55 million this biennium is going for continuing programs and for staff. Among the expenditures, $11.7 million was set aside to close the funding disparity between UNLV and the University of Nevada, Reno, and the community colleges. About $7.8 million is being spent for positions in technology and $8.4 million is going for student financial aid.

The fund is spending $2 million to bring gender equity to athletic programs at UNLV and UNR, and Great Basin Community College in Reno is getting $1.5 million to expand to four-year programs. Several million dollars is allocated for community colleges to hire more full-time faculty.

Regents said these on-going programs should be paid for by the state, leaving the estate tax fund to be used for "one-shot" projects or to start programs.

Regents said they must convince the Legislators to dip into other state funds to support many of the university programs, rather than using the estate tax.