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Danger on road ahead
Nevada survived 2009’s yawning budget gap with one-time fixes. Without those, 2011’s outlook looks increasingly rocky
Thursday, July 30, 2009 | 2 a.m.
Sun Archives
- Taxable sales tumble 21.9 percent in May (7-29-2009)
- Recovery moving slowly but steadily (7-24-2009)
- Numbers show Nevada is most 'distressed' state (7-20-2009)
- Editorial: State drops the ball (7-2-2009)
Bailing wire and Band-Aids last only so long. When it comes to fixing the state’s financial affairs, it’s no different.
Senate Majority Leader Steven Horsford
The state leaned heavily on temporary tax increases and one-time federal stimulus funding to bridge the state’s $1.4 billion budget gap this year, but those stopgap moves have led to forecasts of an even larger deficit in 2011.
More than $1 billion in tax hikes will expire in two years — a key condition for Senate Republicans’ support of the tax increases. The more than $500 million in federal stimulus money used to pay for ongoing expenses this time isn’t expected to be there when the next state budget is hammered out.
Combine the loss of that money with growth in expenses from inflation and increases in people seeking government assistance for food, health care and other services, and some fiscal analysts think the state budget deficit could approach $2 billion when the Legislature meets in 2011 for its next regular session.
There are few signs of a dramatic rebound in tax revenue. The state reported Wednesday that sales tax revenue fell 21.1 percent in May compared with the same month a year ago. It’s still early in the fiscal year — which began July 1 — but if tax receipts continue to lag behind projections, lawmakers could be called back to Carson City for a special session.
Even if revenue projections hold, lawmakers will still face a daunting task.
“We’re going to have an extremely difficult session in 2011, more difficult than last session,” said Carole Vilardo, president of the Nevada Taxpayers Association.
Senate Majority Leader Steven Horsford has said he wants to end the state’s reliance on temporary fixes to balance the budget. His efforts in the last session to broaden the tax base failed, along with his opposition to making the tax increases temporary.
On Monday, Horsford and other legislators will name a subcommittee to assess the state’s quality-of-life indicators and tax structure. The group will develop a plan for lawmakers to debate during their next regular session.
“It’s quite evident that the upcoming session of 2011 will be just as challenging as the last one,” Horsford said. “We have the next 18 months to do the work necessary to come up with a plan to improve our quality-of-life rankings now, five, 10 and 20 years down the road.”
Vilardo said other factors might complicate the work of the 2011 Legislature. She noted that term limits will for the first time remove senior members of finance and taxation committees, and the Legislature will draw new boundaries for political office, known as reapportionment, a notoriously political process.
To understand how the 2009 Legislature relied on one-time money, consider the budget for the Health and Human Services Department, which is responsible for addressing citizens’ social service needs through food stamps, Medicare and other programs.
Gov. Jim Gibbons recommended a budget of $5.57 billion for the department — with $2 billion coming from the general fund and the remainder from the federal government and other government accounts.
Using stimulus money, lawmakers increased the department’s budget by $173 million. But in doing so, they cut the amount coming from the general fund by $81 million — creating an ongoing deficit of $254 million if stimulus money is unavailable in the future.
That figure will be just part of the massive shortfall some analysts expect lawmakers to deal with in 2011.
Legislators acknowledged their work amounted to a temporary fix, but noted they worked on a tight time line and dealt with a governor who they saw as disengaged.
Horsford said the Legislature met the steep challenges of this session and finished on time.
“There were those who predicted that we would have a nightmare session in 2009, it was going to be a train wreck, we’d need multiple sessions,” he said. “Working in a bipartisan manner, we kept the fabric of the state together.”
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we as readers have already assessed if they legalise prostitution and tax it at 15% they could improve their balance sheet by at least $720 million per year..
The 2011 Legislative session is going to be challenging. It will need to take a broad new approach to taxation in Nevada. The status quo is no longer good enough. All options will need to be on the negotiation table even the ones that are considered too taboo. Legislators will need to be diligent in their work not allowing for the typical session to take place, which is waiting till the last minute to get the hard work done. This is not a time to cram like a collage exam but to excel in the face of diversity.
The Senate Majority Leader is taking the right steps by creatinga subcommittee to assess the state's quality-of-life indicators and tax structure. I will be one paying close attention to what their findings are. I hope others will be too.
"If there is no struggle, there is no progress."(Frederick Douglass)
It is the legislators job to make progress possible.
It didn't take a PHD (Pile Higher, Deeper) in Economics to see all this coming. Even if this 'White Elephant' new City Hall proposal was paid for by stimulus, it's merely a projected tax increase to maintain.
Nevada isn't the only state with budget problems. It's just about ALL of them that are having insurmountable problems except Texas as we were so annoyingly reminded yesterday by "Barney Fife".
As markp suggested, legalize prostitution since so many are not against it. I'm certainly not. Also, let the politicians get out of bed with the gaming industry and raise the casino taxes, even 1% would help. And if the whiny cry baby casino corporations ran their businesses differently, ie quit relying on profit projections based on $400 a night room rates, they wouldn't feel it as much. And they wouldn't be in the situation they all face today.
What a shock. I thought these people had their special knowledge that declared the Governor's projections of large deficits and growning deficits was wrong. Instead, the Goveror turns out out to be correct.
For all the editorials praising the legislature and tearing down the truth the Governor was telling, the SUN should have much of the blame for the coming problems.
It is time for a NV state income tax. This state wasn't big enough in the past for it but frankly its grown too large for too long without one.
What needs to happen is get rid of these old farts and there ideas! This is the 2000 s!Time for new blood and ideas!TAX Prostitution!Legalize pot,and tax it.AND LAST BUT NOT LEAST!!! GET RID OF THE ILLEAGALS THAT ARE TAKEING WHAT AMERICANS PAY FOR EVERYDAY!When they can get more services than an american then we do have a big problem!
Las Vegas #1..............foreclosures, unemployment factored.
http://sev.prnewswire.com/null/20090730/...
Are they really starting this already? The first thing I would say is there is no such thing as a "sunset"; all those tax increases are going to stay in place. If that isn't enough, me (teacher), and other state workers, elderly, poor, are going to get axed pretty good.
The population of this state is nothing and there are more than enough resources here to fund our states operations as long as thoughtful people can get together and figure it out. So I hope they don't wait till the last minute or another band aid fix is surely on they way.
I don't think the government is going to solve this; it is going to take a shift in the business model of strip casinos to get us making money again. Ten years ago I used to go down there and get treated like a king as a guy playing fifty cents a pop at a poker machine, now if you do that you get ignored like you have some infectious disease. The casinos catered too much to the whales when it's the millions of small spenders that build these casinos.
Maybe it is time that Nevada becomes known as the "Self Responsibility" state.
If you have not worked at least one year in Nevada you do not receive any type of City, County or State aid. No unemployment, no food stamps, no welfare, nothing.
If you have worked for one year and fall on hard times you can receive benefits for up to six months but only once every five years.
We don't need to be the PC state that every dead beat in the country wants to come to. It is time that we let people fend for their self or move on down the road.
You combine that policy with also removing anyone that is not here legally you will need half the taxes you currently collect.
Really is not that hard as long as you are not trying to kiss up to everyone for a vote.
vegaslee,
"If you have not worked at least one year in Nevada you do not receive any type of City, County or State aid. No unemployment, no food stamps, no welfare, nothing."
Amen
mywallet7000,
my sentiments exactly.
and the same fools try to make Horsford sound like some kind of hero. F street tunnel about says it all for our senior state legislator.
70 million dollars WASTED so he can later claim to be the "hero of the people" bringing money back to his "repressed" neighborhood. what a colossal waste. government will spend as much of OUR money as they can, particularly if it bolsters the power of individual politicians.
and LV-spiff,
state income tax? what u fail to realize is that the tax structure in this state is PRECISELY why we were the fastest growing for so many years. people moved here in droves from California and New York to escape the "progressive" governments and confiscatory state tax structures.
and now u think u can just bleed the extra money our government keeps spending WITHOUT fundamentally altering what allowed us to grow?? they will turn vegas into a frickin' ghost town. why would anybody move to the middle of the desert and get raped by the tax man, when they could stay in beautiful california for the same thing. and why would anybody take the risks to start a small business when horsford and his cronies are just going to take everything they work for?
Easy revenue streams that should be used to balance the 2011 budget:
1. Increase taxation on precious metal operation in Elko and White Pine County.
2. Legalize brothels in Clark County (maybe Washoe as well) with all the appropiate legal safeguards and taxation mechanisms.
3. Increase taxes to fight urban congestion - gasoline tax, toll roads, etc.
4. Impose a "poll tax" for access to strip clubs and other adult venues.
5. Legalize, regulate, and tax marijuanna - Oscar's "little amsterdam" district is looking more appealing.
Do NOT do the following:
1. Impose an income tax.
2. Raise the payroll taxes on businesses (any more than they already have been).
3. Continue to fleece the tourists with car rental taxes, more room taxes, etc. Let them come here on a budget, enjoy themselves, and spend accordingly.
For Nevada to survive it needs to utilize its Libertarian history to pave the way for a better future.
As for Horsford, NO, I cannot afford an income tax, so forget it.
Well.....when it happens, what are you going to do? Move to another State?
If you have not worked at least one year in Nevada you do not receive any type of City, County or State aid. No unemployment, no food stamps, no welfare, nothing.
If you have worked for one year and fall on hard times you can receive benefits for up to six months but only once every five years.
***************
vegaslee:
You obviously don't understand how unemployment works.
travislv86
You don't understand unemployment either.
If you have worked here less than a year and lose your job, your unemployment comes from your previous employer that you worked for before moving to Las Vegas. And I believe even if you worked here a year, it comes from the previous employer. If you didn't work at all prior to moving to Vegas, then you are **** out of luck.
Katie,
I have been an employer for over 25 years. Get back to me when you have been on the paying end of things for a while.
I can solve the problem. Easy fix ... have a reporter contact me via e-mail and I'll explain.
Katie,
Thanks for unemployment 101, which really wasn't what I was talking about, it was the other three he mentioned....... the handouts for people that NEVER work. And you make it sound like six months is a three day weekend. I think 180 days to get a new job is reasonable.
1) Legalize & tax both prostitution & marijuana throughout the state.
2) Implement both Real ID and e-Verify, and severely penalize employers in the state who fail to check.
3) Convert Yucca mountain to a Federal+State SuperMax prison.
4) Freeze state pay scales; freeze state hiring; limit overtime to emergency services personnel; prohibit all new state funded construction (but allow for repairs & conservation modernization).
5) Look for efficiencies in education and welfare while attempting to minimize any further reductions in the quality or availability of either. (Consider eliminating redundancies between UNLV, CSN and NSC; consider requiring unemployed welfare recipients to spend several days a month as volunteers for community clean up projects or the like.)
6) Stop imposing unfunded mandates on Counties & Cities -- empower them instead.
And then start cutting, using 2009 revenue as the baseline for the 2011 budget, 2010 for 2012, etc.
"for Horsford, NO, I cannot afford an income tax, so forget it.
Well.....when it happens, what are you going to do? Move to another State?"
Why yes Katie .. We will be gone in a heartbeat if Nevada passes a state income tax ... along with a large number of fellow retirees.. But my wife will thank you for passing the personal income tax as she really misses Iowa.
There isn't going to be a state tax here. There are so many other things they would do first. I think we should all just have a cigarette and wait before we freak out.
Avoiding a income tax is looking harder everyday.