Study: Nevada could lose $50 million in fed funds

Monday, May 21, 2001 | 10:56 a.m.

Nevada state and local governments stand to lose $50.3 million in federal aid next fiscal year if Congress approves all of President Bush's proposed spending measures, according to a Washington think tank.

The nonpartisan but liberal-leaning Economic Policy Institute calculated that would represent a 6.7 percent loss, if one accounts for inflation and population increases. The program that would lose the most money in Nevada would be highway aid, which goes toward construction, engineering and right-of-way acquisition, it said.

Other deep cuts would involve education, environmental protection and public housing programs, the group said.

"What is not being discussed is that there is a paring back of domestic spending and it will grow over the next 10 years," institute economist Lawrence Mishel said. "People care about funding for schools and drinking water programs. It's unusual to see a big cut in this type of spending."

But Don Hataway, deputy state budget administrator, said Nevada has not been informed of such potential cuts. He also said the institute's calculations could be countered by increases in per-capita federal funding for Nevada based on the 2000 Census.

"A president has rarely gotten everything he has proposed in his budget," Hataway said. "We will have to work with our congressional delegation to make sure our resources are protected. We would not want to lose $50 million."

A Congress divided mostly along party lines approved the president's overall fiscal 2002 budget earlier this month. It included a 4 percent growth cap for many programs. But Congress will not vote on specific tax and spending measures until later this year.

The institute, whose founders included former Labor Secretaries Robert Reich of the Clinton administration and Ray Marshall of the Carter administration, studied 192 of the largest federal programs that involve grants to state and local government. The study calculated this year's allocation for each program, established a fiscal 2002 baseline by accounting for inflation and population increases, and then compared Bush's proposed spending to the 2002 baseline.

Using that formula, the institute reported that Nevada received $712.5 million for such programs this year and would have been in line for $754 million next fiscal year. But the institute found Bush is proposing only $703.7 million, or $50.3 million less than its 2002 baseline for Nevada.

The federal government allocated $213.1 million in highway aid to Nevada this year, meaning its baseline for next year ought to be $222.9 million, the report stated. Bush has proposed only $196.1 million, which is $26.8 million, or 12 percent, below the baseline.

"We haven't had any indication of cuts, but with any cuts we'd obviously have projects that would be delayed," said Scott Magruder, spokesman for the Nevada Department of Transportation. "I'm not saying that that's critical, but you could have a backlog. It would affect the whole state."

Major proposed Southern Nevada road projects that depend on federal funds include the widening of U.S. 95 from the Spaghetti Bowl to the Rainbow curve, the alternate bridge route below Hoover Dam and the Boulder City bypass to the planned bridge.

Magruder said Nevada does not use all of its federal allotment, because much of it involves funds the state has to match. During the past four years the state has received $40 million to $50 million a year less than its federal allotment because it has either failed to match all such funds or did not meet other requirements.

The institute reported that at least eight major programs would be eliminated under the Bush proposal. Among them are class-size reduction and school renovation.

Walt Rulffes, chief financial officer for the Clark County School District, said the district has not used the school renovation monies -- which are actually loans financial institutions make to school districts in return for tax credits -- because those are normally earmarked only for impoverished communities.

But Rulffes said elimination of class-size reduction funds from the federal government would be devastating. The institute reported that Nevada received $7.6 million this year and would have been in line for about $8 million next year.

"That would be the equivalent of about 100 positions," Rulffes said, referring to teachers and counselors. "That would be a crushing blow to lose those dollars."

The institute also calculated that Nevada would lose about 27 percent of its funding from the Environmental Protection Agency if Bush gets his way. Nevada state and local governments were allocated $14.4 million of such funds this year and would have been in line to receive $15 million next year. But Bush proposed only $10.9 million.

Nevada Environmental Protection Division Administrator Allen Biaggi said he has heard that the federal agency would absorb cuts, but that state and local environmental protection would not be affected.

"The Bush administration has said that the states do most of the permitting and most of the enforcement anyway," Biaggi said. "We do all the permitting for air and water and for solid and hazardous waste.

"If there is contemplation of cuts in state programs, that could have serious ramifications for us. We would probably have to cut back in terms of our program activities, including grants to communities for water projects and other infrastructure improvements."

Not everyone thinks it is a good idea to rely on federal discretionary funds. One such person is Terry Campbell, executive director of the conservative Nevada Policy Research Institute in Reno. He said more decision-making, including funding and taxation, should be made at state and local levels.

"In education there are so many strings attached to these federal programs. There are many programs set up 10 to 15 years ago that are outdated and don't work," Campbell said.