Nevada among 36 states to increase taxes

Friday, Dec. 5, 2003 | 11:14 a.m.

CARSON CITY -- Nevada was not alone in raising taxes last fiscal year. Thirty-five other states enacted broad-based tax increases, a national report says.

The National Governors Association released its fiscal survey of the states Thursday that showed 36 states raised taxes by $9.6 billion last fiscal year.

Nevada's Legislature enacted an $833 million tax increase over the next two years.

But Nevada bucked another trend among the states. While most other states held down expenditures, Gov. Kenny Guinn proposed, and the Nevada Legislature approved, an increased budget for the present biennium that totals a 24 percent increase over the previous one.

Nevada's general fund budget rose to $2.3 billion this year, a 14.1 percent increase, and will grow again to $2.5 billion next fiscal year, a 9.9 percent increase. Much of it is to take cover an increase in growth in school population and medical needs.

In contrast the governors association said the other states "pared back spending significantly" this fiscal year.

Overall, state expenditures are expected to rise only by 0.2 percent over the previous year, the smallest nominal increase since 1979.

Greg Bortolin, Guinn's press secretary, said Nevada's expenditures were much greater because Nevada is the fastest growing state in the nation and has "been bringing up the rear" in most social service categories.

"Services have been lagging" and they must be provided for Nevada's "most fragile citizens," Bortolin said.

The Las Vegas area is getting 60,000 to 80,000 new residents a year and Washoe County is growing at a clip of 10,000 people a year. This budget, he said, "is just keeping up with growth" not experienced by most other states.

But Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said the fact that Nevada was the only state that raised taxes but didn't hold down spending is another indication that Guinn's budget direction was the wrong way to go. Hettrick was one of the opponents of the $833 million tax package who complained the additional tax money went for new services.

Most other states, Hettrick said, cut proposed spending.

The report noted 40 states reduced the 2003 enacted budgets by $11.8 billion after they were passed. Nevada was one of them, reducing spending by $57 million, according to the report. Guinn had ordered a 3 percent budget reduction of agencies but exempted public schools.

The association said that finances of most states last fiscal year remained fragile. It noted that 25 states drew down from their rainy day funds. Nevada drew down $135 million from its rainy day fund leaving just $1.3 million.

If tax revenues come in higher than expected next fiscal year, $50 million will be returned to the fund.

Hettrick said Nevada's economy is rebounding and has made up $63 million of the $200 million hole in the state budget forecast for 2005.

But Hettrick predicted that won't be enough.

"If the governor holds true to his word that he won't raise taxes, he's going to have to cut," the proposed 2005-2007 budget, he said.

The report indicates Nevada was one of 42 states that did not raise welfare assistance benefits for this fiscal year. It noted the federal welfare reform act of 1996 focused on providing supportive services for families to achieve self-sufficiency rather than cash assistance.

Hettrick noted that Guinn initially recommended money for 43,000 welfare recipients. The administration trimmed it to 29,000 and Hettrick said Republicans wanted to reduce it further. The current figures, he said show there are only 27,000 recipients.

The association said that Medicaid spending "continues to strain state budgets severely." States generally appropriated an increase of 4.6 percent for Medicaid this fiscal year, "an amount that most likely will prove to be too low."

The Nevada Legislature approved about $630.4 million in general fund support for the Medicaid program for this biennium, a 20.1 percent increase compared to the last two fiscal years.