$100 million transfer from rainy day fund is approved

Cy Ryan and Erin Neff

Wednesday, March 12, 2003 | 10:59 a.m.

The Assembly Ways and Means Committee this morning unanimously authorized the transfer of $100 million from the so-called rainy day fund to the state's general fund as a way to keep the state from going into the red.

The transfer of the money was requested by Gov. Kenny Guinn as a way to ensure the state will have enough money at the end of the fiscal year in June to both balance the budget and have the required 5 percent ending fund balance.

Assembly Bill 252 transfers the money from the Fund to Stabilize the Operation of Government to the general fund. The measure passed the committee this morning without comment from lawmakers.

That fund would have $36 million in it if AB252 passes. Guinn hopes to repay $50 million of the $100 million transfer in 2004 and pay back the remainder in 2005. AB252 will now go to the full Assembly for a vote. The transfer is part of Guinn's plan to make it through this fiscal year, which ends in June. He has also proposed a series of emergency taxes that would raise taxes on liquor, cigarettes and some slot route operators. The business employee tax would also be raised.

Guinn said the state may be able to "squeeze through" to the end of this fiscal year without new taxes if there is not a war in Iraq.

He said this morning he thinks the chairmen of the Senate and Assembly taxation committees are waiting "for the next 10 to 15 days to see what happens if there is a war."

Guinn has proposed a series of tax increases to take effect April 1 to carry state government through until June 30. And he proposed taking $100 million out of the "rainy day" fund to help pay the bills during the next several months.

"We can all wait together to see what happens," the governor said. "If we don't have a war we hopefully can squeeze through. If there's a war the revenues will drop substantially."

He said past "April 1 or 15 it will be difficult to make substantial cuts" in state government. He said any reductions would be drastic because there is such a short time left in the fiscal year.

The governor is also proposing an increase of about $1 billion in taxes for the next two years.