Editorial: Use ‘surplus’ to preserve scholarships

Monday, Jan. 17, 2005 | 8:51 a.m.

Gov. Kenny Guinn is proposing a $100 million bond issue that would cost taxpayers nearly $46 million in interest payments over the next 20 years. The proposal seems reasonable at first, as the money would be used to secure the future of Millennium Scholarships for Nevada high school graduates.

But when compared with another of Guinn's proposals, the bond sale sounds unreasonable, if not illogical.

Guinn is also proposing to give away $300 million he says is surplus state money. This "surplus" came from new and increased taxes passed by the 2003 Legislature, as well as from higher than projected sales tax revenue. The giveaway would benefit Nevada automobile owners, who would get rebates up to $300 for every vehicle they registered in 2004.

If Guinn's proposals are approved by the Legislature, the state will be giving away $300 million that was supposed to go toward improving state programs, such as the Millennium Scholarships. And it will be issuing $100 million in 20-year bonds, which will have cost Nevadans $145,562,877 by the time they are retired in 2025. With $300 million in the bank to give away in a short-term political stunt, the state should not be selling bonds that will place a long-term burden on taxpayers.

We have always supported the scholarships, which the governor created five years ago using money the state had coming from the tobacco settlement. The scholarships provide incentive for high school students who achieve good grades to pursue higher education. They have been very successful, which is why their future is in jeopardy. Many more high school students are taking advantage of them than projected. And there is another problem. The tobacco settlement was tied to the revenues of the tobacco companies. With fewer people smoking these days, revenue is decreasing. The state treasurer's office says that if something is not done, the program will show a $73 million deficit by 2010.

In principle, we agree with Guinn, who is saying that the program should be saved by infusing it with new money rather than by reducing student eligibility. But we would go about it much differently. The giveaway, if there must be one, should be reduced to $200 million. The $100 million saved could be invested in an interest-bearing account and dedicated to the Millennium Scholarships. That way, Nevada could preserve a worthy program while at the same time earning money, instead of throwing it way on interest payments.