Private investment proposed to cut state shortfall

Tuesday, April 9, 2002 | 11:13 a.m.

CARSON CITY -- State Treasurer Brian Krolicki is working on a plan to produce a one-time $30 million windfall to help the state solve part of its budget crunch this year.

Combining the amount with $30 million already identified, state officials could cover $60 million of a $100 million shortfall in tax revenue expected this year.

Final details are not in place but Gov. Kenny Guinn is expected to talk about the new development at the Wednesday meeting of the Legislative Interim Finance Committee.

The committee also is to consider a request by the state Board of Examiners, which Guinn chairs, to use $3 million from the state's emergency fund to lobby against a nuclear repository at Yucca Mountain.

Guinn said this morning in Washington that he would take a closer look at the $30 million to assess where that money is coming from and where it would be used.

"That's not Yucca Mountain money," he added.

Under Krolicki's plan, the state would gain $20 million by contracting out property tax revenue earmarked to pay off debt.

A private company would invest the money for the state, investing in higher yield and riskier investments than the treasurer's office is allowed to, and would keep the difference. The state would get $20 million up front.

Attorneys for the Legislature are reportedly researching the proposal's legality.

Guinn has said that another $10 million could be found in state accounts from the 15-cent property tax that pays the general obligation bonds or state debt.

Extra revenue and interest have built up over the years in that account, so that money could be used and the state would still have enough income to meet its obligation, he said.

Money that would come from Krolicki's plan would be in addition to about $30 million the state has found. That money comes from Guinn's ordered a freeze on state hiring -- that order accounts for a saving of more than $1 million a month -- along with an unexpected $9.5 million in tax revenue from the state Department of Motor Vehicles and money left over from last fiscal year.

The governor is also searching for savings in the budget to help both this fiscal year and next fiscal year, when the deficit could rise to $110 million.

State officials are weighing delays in:

These could be held off for several months to save money.

Guinn has said he does not want to delay the scheduled 4 percent pay raise for state workers or take money from the public schools.