Financial news for state is not good

Friday, Jan. 25, 2002 | 9:58 a.m.

CARSON CITY -- A double dose of gloomy financial news for state government was released Thursday showing tax collections continue to lag while welfare costs are rapidly growing.

"It puts us further in the hole," says state Budget Director Perry Comeaux, referring to the report on taxable sales in November that showed an increase of 1.5 percent.

At the same time, the state Welfare Division revealed the number of public assistance recipients rose to 30,427 in December, a 15.3 percent increase over the previous month. Since December 2000, the number has skyrocketed by 70 percent.

Gov. Kenny Guinn said Thursday he wants to wait for another month of tax reports before he decides whether to impose tighter spending limits or to loosen the purse strings on the already imposed restrictions.

Guinn said tax revenues so far this year are down $37.5 million but that has been offset by $26 million coming from extra savings and excess money from last fiscal year. "We're down $10.5 million to $11 million," the governor said.

He thinks the state can get through this fiscal year. But next fiscal year will present a greater problem.

Guinn also revealed that the reserve in the unemployment benefits fund to pay the jobless is enough to cover 12 to 14 months. Initially the state thought it had enough reserves for 18 months.

On Thursday, the state Taxation Department reported it has collected $263.6 million in sales tax so far this fiscal year, an increase of 3.8 percent. But the state's budget is based on a 6.1 percent increase, leaving a difference of 2.3 percent.

Gaming taxes for the first six months of this fiscal year are coming in 4.2 percent below last year. The budget is based on a 3.5 percent gain -- or a 7.7 percent gap.

Sales and gaming taxes make up more than 75 percent of the state's budget.

Comeaux said the sales tax receipts for November were better than October with continued strong auto sales. And the bar and restaurant business in November was not down as much as it was in October.

"We're coming back," Comeaux said. "We're going in the hole at a slower rate."

Roger Mowbray, deputy state welfare director, said the increase in public assistance was mostly in Clark County since the Sept. 11 disaster.

He said the division will have to dip into a reserve fund a second time for money to cover the increased numbers.

In November, the Legislative Interim Finance Committee shifted $4.5 million out of the reserve fund to take care higher than projected cases, leaving more than $20 million.

Mowbray said the state may also have to hire more workers to handle the bigger influx of people applying for public assistance.

The Legislature approved enough money this fiscal year to cover 17,818 welfare recipients a month. But every month so far, the number has exceeded 20,000.

Mowbray said the division will probably approach the Interim Finance Committee in late March or April, asking to shift some money out of the reserve. So far the amount has not been determined. In addition, Medicaid, the medical program for the needy, is signing up more recipients than anticipated. The Legislature budgeted for 125,524 recipients this fiscal year and 133,142 for next fiscal year. The number in December was 141,029. Comeaux said the Medicaid would also have to tap its emergency fund that also stands at more than $20 million. He said the preliminary numbers from the first two weeks in January show the increase in Medicaid is leveling off somewhat. The caseloads in both welfare and Medicaid are already higher now than for the next fiscal year. And if things don't turn about, the reserve funds in welfare and Medicaid will be used up by the end o f the biennium, the budget director said. When Congress enacted welfare reform, it put some extra money in the state's budg! et to handle these emergencies. "The good news is we have money in reserve" for the two programs, said Comeaux.

Another problem is the program to provide low-cost insurance for children of the working poor. The program, called "Check-Up" was budgeted for 20,574 children for this fiscal year. But Mike Willden, director of the state Human Resources Department, said enrollment is at 22,850.

He said the Interim Finance Committee will be asked at its next meeting to transfer about $4 million from the budget of next year to cover the higher costs of this fiscal year. Of the $4 million, about $1.3 million is state money and the rest is federal funds. But that will leave a gap in the money needed for the 2003 fiscal year.

One item of good news is that there are fewer prison inmates than projected, said the budget director. So there should be some savings in that account.

Guinn is continuing his state hiring freeze. And he is postponing spending on a number of one-shot items, such as car purchases. The freeze on hiring is saving $1.5 million a month.

Guinn said once he gets the sales tax figures on the Christmas shopping season and the new casino taxes report, he will be able decide on what, if any, new actions he will take.