Guinn: Budget ‘is going to be tough’

Friday, Nov. 1, 2002 | 11:35 a.m.

CARSON CITY --The preliminary estimates by the Economic Forum of Nevada's future tax collections is sending shudders through the administration of Gov. Kenny Guinn.

"There is going to be gnashing of teeth," Guinn said, referring to the budget to be presented to the 2003 Legislature.

The Economic Forum, a group of five citizens, Wednesday made a preliminary prediction the state would receive $3.876 billion in the coming two fiscal years -- or only about $63 million more than was allocated in 2001 for the current biennium.

"This is not a surprise," Guinn said.

Guinn noted the duty of the Economic Forum is to forecast tax revenues, not worry about the state's budget.

Forum Chairman Cary Fisher said the group was required to predict the tax revenues to the best of its ability and not be concerned with politics.

The $63 million in additional revenue over the present biennium won't even cover "roll-up" costs, Guinn said. For instance, he estimated the state will need $150 million over the next two years to support increased enrollment in the public schools.

The state is guaranteeing school districts an average of $3,991 per student this fiscal year. Guinn said the $150 million does not include increasing the basic support per child to cover higher utilities, merit raises for teachers and other rising costs.

In addition, Guinn promised teachers a 2 percent raise starting in July 2003 that will cost another $68 million over the two-year period.

The governor estimated the state will need another $75 million to finance the increase in enrollment in the University and Community College System, $10 million to $15 million more to prop up the state's employee insurance system and other costs. Early in the Legislature, Guinn intends to take $110 million from the state's "rainy day" fund to balance the budget this fiscal year. The governor said this fund must be replenished to meet future emergencies.

The governor is talking about putting $25 million a year into the "rainy day" fund to restore it, after he taps it in early 2003.

Guinn said many recommendations made in newly developed strategic plans for senior citizens, the disabled and the medical needy have great merit. But they would cost more than $350 million in 10 years.

The economic forum meets Dec. 2 to make its final recommendation on future tax collections. The governor must build his budget on revenues available as estimated by the forum.

"It's going to be tough," said Guinn, who has already worked to cut the state budget.

Assembly Minority Leader Lynn Hettrick, R-Minden, said this was going to be a "tough" budget session. "Things are very tight," said Hettrick, a member of the Assembly Ways and Means Committee.

He said there was "an appetite" to raise taxes but the question is where the taxes are raised and how much they are increased. And if taxes are increased, "everybody will want a piece of that."

He said the "wish list" of lobby groups would double the state's $3.8 billion budget and that won't happen.

Assemblywoman Chris Giunchigliani, D-Las Vegas, said "We're going to start the session in the hole." She said she was glad to see the economy is recovering after 9-11 "but it's not nearly enough" to cover the requests. She said the so-called "sin taxes" on liquor and cigarettes would probably be raised early in the session but those are not enough to cover the deficit. "We knew there would be a $30 million to $60 million hole in the budget at the last session," she said. "We have got to stop doing funny budgeting.

Sen. Joe Neal, D-Las Vegas, the Democratic candidate for governor, said the casino taxes must be raised to fill the hole in the budget. "We've got to touch gaming because a lot of the costs of the state are because of the casinos."

Neal wants to raise the gross gaming tax from six and one-quarter percent to ten and one-quarter percent to bring in an additional $388 million a year. He said he was not opposed to raising the "sin taxes" but the casino taxes must be increased first.

The governor sent directions to state agencies to use in preparing their budget. Departments must use the current year as a base and double it for the coming two years.

State Budget Director Perry Comeaux said agencies have submitted a proposed flat budget total of $4.7 billion, which is $900 million more than the Economic Forum is forecasting. He said he expects that his office will reduce some of the $4.7 billion.

But he said the agencies have asked for another $1.1 million for special issues.