Economy may squeeze state budget

Tuesday, March 27, 2001 | 11:09 a.m.

CARSON CITY -- Unless the economy improves, legislators might have to slash more than $140 million from Gov. Kenny Guinn's $3.4 billion budget.

"Everybody thinks we have a bundle of money, and we don't," said Assemblyman Morse Arberry, D-Las Vegas, chairman of the Assembly Ways and Means Committee.

Legislative fiscal analyst Mark Stevens, in a briefing before the committee Monday, said collections from sales and gaming taxes are not measuring up to Economic Forum predictions. Stevens said the state would be short $44.7 million this fiscal year, $46.9 million next fiscal year and $49 million the following year.

The Economic Forum predicts tax revenues for the next two years, and the state's budget is based on those amounts. This fiscal year sales-tax collections are increasing by 5 percent, as opposed to the 5.9 percent predicted. Receipts from the gaming tax are down 2.3 percent this fiscal year, but the forum suggested a gain of 5.9 percent.

Arberry said he wanted to get the tax collection problem before the public "because (people) have a mistaken notion we have all this money right now."

The committee has sent a letter to Guinn asking which programs he intends to cut if revenues fall short. "We want the governor to come to the table and close the holes. It's his budget, even though it is in our house. We prefer he take care of it," Arberry said.

Guinn wants to wait until new Economic Forum forecasts are made April 30 before taking any action, Arberry said.

Assemblyman David Goldwater, D-Las Vegas, said he hopes the forum realizes online transactions would cut into state sales-tax collections during the next two years. These sales over the Internet "will affect our growth rate," he said, referring to sales-tax receipts.

Committee members also suggested there were "holes" in Guinn's budget regarding the practice of dipping into reserve accounts and spending one-time allotments on continuing programs.

Assemblywoman Chris Giunchiligiani, D-Las Vegas, suggested that technique would be "burdening the next session and underfunding this budget."

The issue arose Monday when Guinn sent some budget revisions to the committee. He wants to take $3.7 million from a reserve account for the state Tourism Commission and finance ongoing park and cultural affairs programs.

"Are we deferring the inevitable or are we passing the buck?" Giunchiligiani said.

But Assistant Budget Director Don Hataway said questions always arise when taking money from a reserve account to pay for continuing programs. Two years ago the administration dipped into the Intergovernmental Transfer Reserve fund to finance ongoing programs. This time the budget put $50 million in a general fund to continue these programs.

Hataway said the same issues face the state every two years.

Assemblyman Joe Dini, D-Yerington, questioned using the tourism commission's reserve when the state is fighting to compete with Indian and other gaming ventures outside Nevada.

Guinn is predicting $80 million will be unspent by agencies in the second year of the biennium, and he has programmed that into the budget. The $80 million is higher than what is traditionally reverted to the general fund by state agencies. If the reversions are lower than anticipated, general fund money would have to make up the difference in the next budget.

Money from the estate tax collections, which have been quite high in the past few years, is being allocated to continue financing public education. Committee members are concerned that revenue culled from state tax receipts might decline, and general tax revenues would have to be used to continue some programs.