Rainy day fund is empty but new regulation could provide stability

By Joe Schoenmann

Thursday, Nov. 13, 2008 | 2 a.m.

State Assembly Speaker Barbara Buckley now has a specific state budget change she is championing: revamping the rainy day fund.

“We had $276 million in it and it was drained,” Buckley said, blaming the depletion on state revenue shortfalls.

One of the biggest problems with Nevada’s emergency reserve, she said, is that money is not earmarked for it.

So when times are good, state legislators and the governor can choose to squirrel away just-in-case money, but they don’t have to.

Buckley said Wednesday that in the upcoming legislative session, she will propose a “forced savings account” into which 2 cents of every “new dollar” of state revenue would be deposited. New dollars would be any money that comes in above existing revenue levels.

Taking the pennies from new dollars would prevent this system from siphoning funding from existing programs, she said.

Having talked with state Sen. Bill Raggio, R-Reno, and Democrat Steve Horsford, the state Senate’s new majority leader, among others, Buckley said she has not “found one person who does not think it’s a good idea.”

Even the Las Vegas Chamber of Commerce agrees the fund needs to be strengthened.

Hugh Anderson, chairman of the chamber’s government affairs committee, noted last week that the analysis of ways to improve the state budget process “should include a look at the rainy day fund size and process.”

“The fund we have now,” Buckley said, “is not sufficient in amount and it’s not sufficient enough to address the boom and bust cycle we’ve seen for the last several decades.”

Though she hasn’t worked them out, new restrictions on access to the fund would also be put in place. “You could tie it to a specific shortfall level,” she said.

At least one other lawmaker has another idea about how to replenish the fund. Democratic Sen. Bob Coffin said that since about January, he’s been touting the idea of a “temporary” tax that would cease when certain thresholds are met — a set amount for the rainy day fund, for example, or the state coffers’ 2007 amounts.

Coffin’s idea even seems OK with Gov. Jim Gibbons. The “no new taxes” governor said last week that while he won’t introduce any new permanent taxes, he might approve a temporary new or increased tax if it has an expiration date.