Guinn must make cuts of $40 million to budget

Wednesday, May 15, 2002 | 11:08 a.m.

CARSON CITY -- In the next six weeks Gov. Kenny Guinn must decide where to cut $40 million from the $1.7 billion budget to keep the state financially healthy.

State Budget Director Perry Comeaux told the Board of Examiners Tuesday that the fund balance will fall to a 10-year low of $54.7 million by the end of the fiscal year, June 30. That's too low, he said.

The state had an expected shortfall of $115 million this year, due mainly to the events following the Sept. 11 terrorist attacks.

State officials have made up about $40 million of that so far, Comeaux said.

The state saved $11 million to $12 million by keeping jobs vacant this fiscal year, and $30 million was added to the state revenue when state Treasurer Brian Krolicki found a way to generate more money from the bond redemption fund used to pay off the state's debts.

Another $40 million has not been spent, because one-shot expenditures such as buying equipment, cars, computers and other things were held off. The governor now will have to decide which of those expenditures can be eliminated and which will go forward.

Guinn's Chief of Staff Marybel Batjer said the governor has already deferred some new social service programs. She said those were "painful decisions" because the governor had fought hard to include them in his last budget.

Batjer said so far, the final decisions have not been made on what one-time expenditures will be eliminated.

She noted that 1,500 jobs were frozen. But then overtime started creeping up in some agencies, she said. The governor has asked agencies to be careful in letting this overtime get out of hand, Batjer said.

The governor has already pledged not to cut education spending, pay raises for state workers or health care, Guinn spokesman Greg Bortolin said.

The state started this fiscal year with $125.7 million in the bank, but tax collections have not lived up to expectations.

Guinn said gaming revenues in March were down 5 percent, and that the forecast the budget was built on predicted a 5 percent increase.

Comeaux said the real problems will come in trimming the budget next fiscal year.

During the meeting Guinn also raised the possibility of hitting out-of-state contractors who do business with the state government.

"We're sending millions of dollars out of state and we get absolutely nothing," Guinn said. The firms don't pay property or employee taxes, he said.

As an example, he pointed to two contracts with out-of-state firms that supply food. The state's Food Distribution Program has a $1.8 million contract with Let's Do Lunch of Gardena, Calif., and a $1.6 million contract with SSE Foods of Marshall, Minn.

State purchasing officials said those contracts were awarded on the basis of price. Nevada companies do not get any advantage in the bidding process for being in-state.

Guinn said he's going to turn the problem over to his task force on taxes, which is looking for new revenues for the state.

In other business the examiners agreed to write off $788,575 in bad debts for the state Department of Corrections. Inmates owe the money to the state but many of them have died or have been released from prison.

Most of the debts come when the state assesses an inmate who has injured another to pay for the medical care.

Even though the examiners board wrote off the debt, state Controller Kathy Augustine's office intends to pursue the inmates who have been paroled or released in an effort to get them to pay.

The board recommended approval of an emergency allocation of $448,000 to help the rural clinics' mental health program get through the year.