Guinn urges end to spending trend

Monday, March 13, 2000 | 11:35 a.m.

CARSON CITY -- Can the state keep spending at its present rate for the next eight years and stay out of the red? Probably not, says Gov. Kenny Guinn.

For the past 10 years tax collections have come in at an annual average increase of 8 percent. Nevada is enjoying a sustained period of economic growth. Unemployment has been at one of its lowest levels in history. Three cycles of construction of megaresorts in Las Vegas have added at least a dozen super resorts.

Yet the governor notes that in these good times he was forced to slice $241 million from agency requests last year to balance the state's budget.

Guinn has now scheduled his first economic summit for May 4-5 in Las Vegas, tentatively set at the Charleston campus of Community College of Southern Nevada.

Scott Scherer, Guinn's chief of staff, said the administration will "lay out our projections and our assumptions" on the long-range financial future of Nevada. The session will allow people to challenge the figures or make suggestions on the state's financial future in the next eight years.

To meet the future needs may require a change in the tax structure, said Scherer, who was quick to add that a change doesn't necessarily mean a tax increase.

Preliminary projections made two months ago showed aid to public schools could eat up nearly all of the state's budget in the next eight years if there is no change in the tax receipts.

And Guinn wonders whether the 8 percent average annual increase in tax collections can continue. Indian gambling in California is expected to cut into Nevada's tax revenue, and the construction boom in Southern Nevada, which fueled big increases in sales tax receipts, is tapering off, Guinn said.

"It's not looking good," Guinn said. "But I won't know until we get there" at the summit, which could spawn ideas that could further streamline state government. But he said after cutting $241 million from budget requests last year, there isn't much left room for further reductions.

"It's pretty evident we're going to have some shortfalls if we don't maintain that 8-plus percent growth rate," Guinn said. "And no one that I have talked to yet feels that will take place."

Many people don't understand the finances of state government, Guinn said.

"A lot of people will say, 'Oh, your budget is $14 billion for two years.' That's right, but $11 billion is federal funds and that leaves you with about $3 billion or $3.2 billion in your general fund budget," Guinn said.

And to get that $11 billion, Guinn said, the state must put up matching funds.

That means 95 percent of the general fund budget is allocated to base programs, leaving little room for maneuvering.

During this period of major growth in the economy, there's been a freeze on state government hiring imposed by former Gov. Bob Miller and continued by Guinn. It was partially lifted to open jobs for workers laid off by the Employers Insurance Company of Nevada, when it converted to a private company and again to add workers to the Department of Motor Vehicles and Public Safety. But there are still more than 700 jobs being held open to save money.

"I know the budget can be balanced for the next fiscal year (2002-2003)," he said. "We can always balance the budget but I want to tell people what it will do to your services."

Guinn wants to continue to strengthen education, which would require higher salaries for teachers. There was no money in 1999 from the state to give pay raises. If there are no increases for another two years, that will hurt recruitment and mean more turnover of teachers, who are now in short supply.

The same holds true for state workers. "I'm told we have 54 positions in technology that we can't fill" because of lagging salaries, he said. "How do we move into the technological world when we can't fill the positions?"

Some predictions show that the state's budget surplus could reach $155 million by June. That's almost double what had been predicted last May. But Guinn says $80 million to $85 million of that money is required by law to be kept in reserve.

The governor, in an interview last week, estimated the state will have $115 million to $120 million available in surplus money in early 2001 for "one shots" -- items such as buildings or grants that do not require a continuing appropriation. "Those can't be rolled up and put into salaries," he said. His recommendations for spending the surplus will be presented to the Legislature.

A governor's task force has been looking at streamlining state government. It's been getting some good recommendations from state workers and the public, Guinn said. But it may take several years to weave them into the fabric of government.

The administration is also looking at moving some programs to the counties, which also say they are in a financial bind. Last week, he talked about one health division employee stationed in Pahrump who is four weeks behind on the inspection schedule. He wondered why the state was given this duty in rural Nevada when the major counties of Clark and Washoe handle these responsibilities.

Now under consideration by the Guinn task force are such recommendations as shifting the state Taxicab Authority, the Transportation Services Authority and the Colorado River Commission to Clark County.

The task force, which is slated to make its first recommendations at a meeting March 21, is also looking at switching such programs as Family to Family, child-care services, family resource centers and recruitment and training of foster parents to local governments or to nonprofit organizations.

A legislative committee is studying consolidating the child welfare systems. At present the state and county governments in Clark and Washoe counties each operate independent systems.

Guinn has been meeting with chambers of commerce, labor organizations, school teachers and other groups, briefing them on the financial forecast -- will not, however, support two initiative petitions calling for higher taxes.