Recession prompts delay in raises in aid to the poor

Wednesday, Feb. 6, 2002 | 9:54 a.m.

CARSON CITY -- About 1,000 welfare families, most of them in Southern Nevada, won't get planned increases in their monthly grants until July and possibly longer.

They are some of the victims of the economic downturn since Sept. 11. State budget officials told the Legislative Interim Finance Committee Tuesday there could be a shortfall of $65 million in tax collections this year because of the sagging economy. That combined with higher-than-expected welfare and medical costs are putting the state into a bind, legislators said.

The benefits being delayed include a $94-a-month increase to welfare families in which one parent must stay home with an incapacitated child. It was already delayed from January to April, and now won't go into effect until July, Mike Willden, director of the state Department of Human Resources, said. Another $93-a-month increase was due to take effect next year.

The average welfare grant for a family of three is $348 a month.

Gov. Kenny Guinn asked that some new benefit programs be delayed until the state gets a better idea of how much it will be short, though benefits already being received will not be cut, Willden said.

Willden also said his department is withholding $200,000 a year that would have been used to get churches involved in helping reduce teen pregnancy and encourage two-parent families.

In a "worst case scenario," Willden said, his agency could run out of money in February 2003 to cover costs of welfare families and the following March for Medicaid, the health program for the poor. That would fall during the 2003 Legislature, which could act to fill the gap.

Guinn said his administration will have a better handle on where the economy is heading when the tax collections from December and January come in. Nevada, he said, is better off than other states such as California, which is facing a $15 billion deficit, and Arizona, which has a $1.8 billion shortfall.

Guinn said a freeze on state hiring instituted in September saves about $1.5 million a month, and an extra $27 million was left over from last fiscal year that could offset the predicted $65 million shortfall.

There are also reserve funds available in welfare and Medicaid that could offset some of the predicted higher-than-expected spending.