Loss of estate tax threatens many university programs
Friday, March 1, 2002 | 9:31 a.m.
CARSON CITY -- When President Bush and Congress voted to phase out the estate tax, they punched a hole of more than $70 million in the budget of the University and Community College System of Nevada.
That money is being used for research, student scholarships and the proposed dental school at the University of Nevada, Las Vegas. It provides funds to bring UNLV on an equal footing with the University of Nevada, Reno, and helps both universities comply with the federal law to increase funding for women's sports.
A committee of the regents Thursday decided to ask the 2003 Legislature to make up the loss of revenues from the estate tax by taking from the state's general fund.
"There is a real problem with this if the governor is talking about a flat budget," said Regent Dorothy Gallagher of Elko, who heads the Committee on Estate Tax.
Gov. Kenny Guinn, faced with decreasing tax revenues in the wake of Sept. 11, has directed state agencies not to include any new or enhanced programs in the budgets they are preparing for the 2004-05 fiscal years.
The $70 million would be above what the state general fund provided last year.
The state has received a portion of the estate tax that goes to the federal government, and one-half of the state's share goes to the university system. The Legislature last year authorized the regents to spend $75 million during the current biennium.
With the tax being phased out, Dan Miles, vice chancellor for research, estimated there will only be $8 million to $9 million available in the next two years in collections. Miles told the committee that "a lot depends on the economy in the next six to eight months and what (the governor's) tax task force recommends."
Regent Tom Kirkpatrick of Las Vegas said if the university doesn't get the replacement money, "It's going to hurt a lot of places."
The committee accepted a motion from Gallagher that regents recommend spending only $2.5 million a year from the estate tax.
At the end of this biennium, there will be an estimated $77 million left in the fund, and the system would use the interest gained each year up to $2.5 million.
Kirkpatrick said as the fund grows it will realize more interest from its investment.
During this biennium $13.2 million is going into research projects at the various campuses, although this money is used to match federal and private funds.
The current budget from the estate tax puts $8.7 million into scholarships for students. The full Board of Regents will vote next week to increase student fees, with some of that money also going toward scholarships. Chancellor Jane Nichols said this will show the Legislature that the students are "willing to step up" and share some of the financial burden.
The fledgling dental school at UNLV is getting $3.5 million this biennium, although Kirkpatrick complained the regents were told the school would never cost the state. The Legislature decided to use estate tax to start the school.
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