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John Coulter / Special to the Sun
Friday, April 23, 2010 | 2:01 a.m.
Andrew Clinger
Related story
Sun Coverage
Sun archives
- Gibbons signs budget bill; state draws M Resort lawsuit (3-12-2010)
- Budget gets OK as session ends; sales tax extended for roads (3-1-2010)
- Bipartisanship emerges in anger at Gibbons over session deadline (2-25-10)
- Democrats: Trim education cuts to 5 percent (2-24-10)
- Gibbons adds to agenda, says session will end by Sunday night (2-24-10)
- Relationship between Gibbons, Raggio shows strain on Day 2 (2-24-10)
- Plan to use cameras to catch uninsured motorists appears dead (2-24-10)
- Gibbons’ budget plan risky in an election year (2-24-2010)
- Proposal to close state prison meets opposition (2-23-2010)
- Budget crunchtime: Lawmakers set to tackle historic deficit (2-23-2010)
- State budget comes up $800 million short (8-22-2010)
- Forecast: Economy will begin to rebound in mid-2011 (1-22-2010)
- Gibbons’ no-talk order further divides branches (1-22-2010)
- Special session may require help of state Supreme Court (1-10-2010)
After struggling through a series of historic budget deficits the past two years, state officials are now trying to answer perhaps the most pressing question facing them: What exactly should Nevada government be doing?
It’s as much a philosophical question as a practical one. But those charged with overseeing state spending know it’s a question better asked now than later as the clock ticks on the next fiscal crisis — Nevada will be short $2.5 billion to $3 billion when the governor, whoever it is, and 2011 Legislature begin work on the budget early next year.
To answer the question, officials are for the first time embarking on a complete inventory of thousands of state services, programs and activities. Each will be ranked as high, medium or low priority, based on its cost and how necessary and effective it is.
The judging will be done by a committee, the Nevada Priorities of Government Working Group, which met for the first time Thursday.
The group is made up of Budget Director Andrew Clinger, four state department heads and Gov. Jim Gibbons’ deputy chiefs of staff, Stacy Woodbury and Lynn Hettrick.
“Instead of looking at the state budget in silos, we’ll be looking at state services as a whole,” said Clinger, who conceived the idea. “What, in our opinion, are the highest priorities?”
State government operates under what can appear to be a byzantine system of budget accounts and work programs. Its general fund has 400 budget accounts, which include thousands of programs ranging from building highways, operating prisons, funding K-12 schools, higher education and Medicare, to running museums and distributing rent rebates for seniors.
“We’re trying to think about government in a new way,” Woodbury said. “With the shortfall we have, government is not going to be doing everything it does today.”
She said the committee will begin with figuring out which programs are required by federal and state mandates or the Nevada Constitution.
The inventory, according to Clinger, will help decide what, exactly, is a priority for the state’s dwindling revenue.
Given the rancor of recent legislative sessions, it’s hard to imagine that the debate over the group’s decisions won’t break down along political lines.
Some on the political right think government should perform a minimal number of jobs dictated by the state constitution. Some on the political left argue that government has a larger role to play, protecting the poor and elderly, providing education opportunities to level the economic playing field and maintaining a certain quality of life.
Conservatives have long argued for a complete evaluation of each state program every two years, as the budget is developed.
Geoffrey Lawrence, a fiscal policy analyst with the libertarian Nevada Policy Research Institute think tank, said it’s impossible to know whether Nevada needs to raise taxes without a comprehensive review of its government programs. “It’s hard to estimate how much money is lost until we go through some type of performance-based budgeting process,” Lawrence said.
Until now, however, most veterans of state government thought such an inventory wasn’t feasible given the time constraints on Nevada’s part-time citizen Legislature, which meets every other year for 120 days to vote on policy and pass a two-year budget.
Carole Vilardo, president of the Nevada Taxpayers Association, called the state’s historical process “automatic pilot budgeting.”
“It assumes that everything from the prior year is correct” and adds increases for things like building maintenance, utility costs and higher employee costs, she said.
The current economic crisis “has us truly looking at what services government is providing and what we should be providing,” she said. “I think that when all is said and done, we’re absolutely up to doing priority budgeting. The only question becomes if there is the political will.”
Legislators are developing their own process to vet spending, which will add another voice to the debate leading up to the 2011 session.
Senate Majority Leader Steven Horsford, D-Las Vegas, said the Legislature’s Interim Finance Committee will next week consider creating a Subcommittee on Spending Efficiency and Accountability.
Horsford said the subcommittee of six legislators will “stop allowing agencies to carry over expenditures, year after year, without justification.” He said it will also create performance indicators for state programs and agencies, something legislation during the 2009 session would have required, except it was vetoed by Gibbons.
Steven Horsford
“The bottom line is we need to rethink what is necessary and what is not necessary in state government,” Horsford said.
The Legislature’s subcommittee will make a recommendation to the Interim Finance Committee by Sept. 1.
Clinger said his working group would complete its review by November.
Clinger acknowledged that lawmakers and the public will likely disagree with some of his group’s rankings. “Not everyone is going to think we get it right, but it will be a tool for everyone to look at,” he said.
In a typical year, the state’s budget office would have by now directed agencies to prepare a balanced budget with cuts or roll-up costs, which account for inflation, caseload growth and employee pay raises, ahead of the legislative session.
Because of the size of the anticipated deficit, that approach won’t work, Clinger said. Out of a $6.4 billion two-year budget, Clinger estimates the shortfall at between $2.5 billion and $3 billion.
Clinger said asking agencies to prepare a budget with, for example, a 50 percent cut would be an arduous and unrealistic exercise “only to have us say, ‘wow, we can’t implement that.’” Instead, he is directing agency heads, including K-12 and higher education, to prepare 10 percent budget cuts, and initiating the parallel process of examining the entirety of state government.
To get a sense of the impact a deficit of between $2.5 billion and $3 billion could have, consider that when the state faced an $800 million budget deficit this year — prompting Gibbons to call a special session of the Legislature — among the cuts being weighed were eliminating a health care program for 20,000 poor children, cutting dentures and hearing aids for the elderly, closing a state prison and shuttering housing for the mentally disabled.
(Under an agreement between the Legislature and governor, those cuts were eliminated, and a 10 percent cut for K-12 and higher education was reduced to 6.9 percent.)
The Great Recession’s impact on tax revenue has forced a half-dozen rounds of such cuts since 2008. Added to the current economic uncertainty is not knowing who will occupy the Governor’s Mansion — Gibbons faces a tough re-election bid — and the Legislature, which will see heavy turnover. For example, because of term limits, no more than six of the 14 members of the key Assembly Ways and Means Committee will return.
The governor, whether it’s Gibbons or someone else, is required by the state constitution to submit a balanced budget to the Legislature in the first weeks of January.
“I see this as establishing a framework for putting together a budget in the future,” Clinger said of the group’s work.
Gibbons, a Republican, faces former federal Judge Brian Sandoval and former North Las Vegas Mayor Mike Montandon in June’s GOP primary. Clark County Commission Chairman Rory Reid, a Democrat, will likely face the Republican nominee in November’s general election.
Gibbons, Montandon and Sandoval have all maintained they will not raise taxes or extend the approximately $1 billion in taxes passed by the 2009 Legislature. The new taxes are scheduled to expire July 1, 2011.
Reid, meanwhile, has dodged questions about taxes, saying instead that he will await the Legislature’s Vision Stakeholder Group, a committee formed in 2009 to make recommendations on the state budget and quality-of-life measurements.
Those with experience examining the state budget say it would be impossible to cut $2.5 billion to $3 billion from state spending and not face federal and state lawsuits over failure to provide minimum services in education, health and welfare, prisons and services for the mentally disabled.
The state could cut $2.5 billion to $3 billion from the state budget, Clinger said. “The question is if you can live with the impact of having those services eliminated.”
Grow up Nevada raise taxes and cut bubba programs.
Most of AZ has a 1-2% tax on food.
Death penalty prosecutions never result in the death penalty and cost millions.
Too many jurisdictions and agencies. i. e. "school district police"
Shallow reporting, frankly.
Why does the reporter only talk to the right-wing NPRI, and the anti-tax NV Taxpayers Association--which represents mining, Wal mart, and other non-taxed mega-corporations?
Couldn't find compassionate folk to comment?
What is the state of Nevada doing to create jobs? Firing people does not create jobs.
All the leadership has done is cut when there is not enough money, and do nothing until that point is reached. They take our money and do nothing to stop the decline in the state. In fact, by doing nothing to prevent the decline, they are actually helping it along.
For every cut in pay their should be a tax increase with built in accountability. Stop duplicating services and cut the top heavy admins. Increase taxes and make sure it stays in the classroom not the administrators and palace fire stations.
Mr Schwartz, you need to ask Clinger if he's estimating a $6.4 billion budget but bringing in only $3.4 to $3.9 billion OR (the more likely case) estimating $6.4 billion budget (our current budget is around $6.6) but assuming the state needs to spend $8 to $8.5 billion for imaginary roll up costs and imaginary inflation that never happened.
YES!
FRESH NEWS from Pat's THINK TANK!!!
It's ALL a DREAM!
The crashes of Wall Street, The Housing Market,
Budget Cutting, Job Losses, Banks tanking, it's
NOT REAL!
There is PLENTY OF DOUGH!
Nevada certainly need not participate in this sheer FOLLY!
Tell CCSD!
Tell McMayor Oscar The Grouch!
Tell Gymmy Gibbons!
Tell em ALL PAT!!!
Government = BAD!
Taxes = Government Tomfoolery!
Public Education = Indoctrination Programs & WASTE!!!
IMAGINARY, says PAT, Reporting Live from the Depths of his Think Tank!
Thanks, Pat!
Pat the hat doen't understand the budget is a two year figure and that you divide by 2 to get what you need to collect on an annual basis for that budget.
The hardest thing for Libertarians and Conservatives is to do the math. If they do, they always find it blows up their ideaology.
But he, not a problem. Just ignore it and keep on truckin.
Time to increase sin taxes and fuel tax, and by a lot.
Tax increases should not target Nevada's golden goose though. Potential tourist taxes might backfire and undermine the Las Vegas economy, must be very careful here. If anything sales tax exemption for all out of state visitors would help increase retail sales. Increased retail volumes would ripple through the entire state economy, would create jobs, actually increase the tax base.
Gmag, let me explain. (And Fred, yes I know it is a 2 year budget)
We have a $6.6 billion budget now.
The $3 billion shortfall comes from assuming that we need to spend $8-8.5 billion (or more) for the next budget. The shortfall comes in because of guestimates that we will only have around $5.5 billion in revenue.
Thus, they want an unrealistic 21 percent increase in spending despite knowing we will come no where close in revenue. The shortfall essentially requires us to cut from imaginary spending that has never existed nor will ever exist in the next budget.
"The $3 billion shortfall comes from assuming that we need to spend $8-8.5 billion (or more) for the next budget. The shortfall comes in because of guestimates that we will only have around $5.5 billion in revenue."
What? There's no assumption that the budget will by 9 billion dollars, Patrick. That's YOUR assumption.
If you would read the articles around here, you would see that our current budget is supplemented with money that won't be around in the next session. Even if we stayed at our current budget levels, stuff like the stimulus money won't be there.
I'm not sure why Patrick's confused, since the other article (which he has also commented on) explains the figure very clearly:
"The following are examples of money the state is currently relying on to fund operations that won't be available as the state builds its next budget:"
$649 million in one-time federal stimulus funding the 2009 Legislature used to balance its budget but won't be available unless there's another federal stimulus.
$939 million in new taxes passed by the 2009 Legislature, which will expire beginning in 2011.
$220 million in room-tax revenue, which was used for the general fund in 2009 but will now be dedicated to K-12 education.
$287 million in one-time gimmicks -- emptying bank accounts and raiding local government accounts, carried out during this year's special session.
$300 million in savings from furloughs passed by the Legislature that are scheduled to expire in 2011.
"That totals $2.4 billion -- before the recession's effect on tax revenue is factored in."
http://www.lasvegassun.com/news/2010/apr...
Edge, that isn't how the shortfall is actually calculated. But those are taxes and gimmicks that were used to kick the proverbial can down the road.
Watch this, $6.6 current budget minus $5.5 guestimated future revenue = $1.1 billion difference.
To put it another way, our $6.6 billion budget was a $6.9 billion budget before the special session and the biennium before that it was a $6.9 billion budget. $6.6 + $2.4 = $9 billion - a budget we've never had and no ever planned on having.
So if the legislature passed a $6.9 billion budget and we currently have a $6.6 billion budget where does the actual $9 billion imaginary budget come from?
You can't add up tax increases and gimmicks and think you've calculated the shortfall.
There is no $9 billion figure, Patrick. That's in your head.
The 6.6 billion budget INCLUDED 2.4 billion worth of revenue which will disappear next biennium. It was not supplemental to the 6.6 billion budget, as you seem to think.
Let me make that clear, again.
The 2.4 billion was not supplemental to the 6.6 billion budget.
Are you clear on that yet?
We had 6.6 billion to spend because tax revenue (4.2 billion) ADDED TO 2.4 billion in temporary fixes gave us that to spend. Those temporary fixes are going away.
They're assuming that revenue collection will be equal to or less than it was in the previous biennium, and they're right.
But if the Governor and Legislature would go after the "reserve" funds of every political entity in Nevada, (Las Vegas, Henderson, NLV, Reno, Ely,the water district,regional transporation districts, etc.) the way they 'swept the trust funds' in the last special session, we would have absolutely no need for tax increases and would be able to provide substantial wage increases for all state employees.
When you add it all up, you might just as well say BROKE. The budget was $6.6 Billion for two years. Duh! That's means we have to collect $3.3 Billion from taxes each year from taxes, the tooth fairy or whomever.
The so-called fixes were all smoke and mirrors. It will be doubtful they raise what they were expected to raise. But it's a shot in the dark.
Still they are all gone in 2011.
So, even IF things get better we are upside down the $2.4 million from the get go. IF they are worse we could be upside down by as much as $4 BILLION.
My expertise says we will be upside down about 50% of the budget. That amount is $3.1 BILLION.
We can send Patrick the bill. Being a multi-billioniare, conservative financial wizard he should easily be able to cover our shortfall.
But wait, what if Patrick makes chump change and he can't afford to pay the bill. Are we all expected to let him and his ideology ride for free on the rest of the people in Nevada?
Tell us oh grand wizard Patrick, where do we get $3.2 BILLION to balance the budget.
Sure we can cut the budget, but who will protect you from the anarchy that will follow?
There is only one viable solution: We need to impose a 4% GROSS REVENUE TAX on all 350,000 registered corporations, limited liability companies and limited liability professional corporations. It solves the whole problem, it is fair, expands the tax base dramatically and eliminates all limited liability free riders.
Fred Conquest
Democratic Candidate for Governor
www.fredconquest.com
FRM - RE YOU REALLY AN IDIOT OR ARE YOU JUST A rEPUBLICAN?
Here's the scoop. When Nevada's empty-headed business suits submit a budget plan that cripples schools, denies medical care, threatens public safety and generally shuts down the state, the federal courts will quickly step in, rip up the state constitution and begin constructing a state that doesn't look like a throw-back to the 19th century. They'll make gaming and mining pay their fair share of taxes. They'll institute a personal income tax on those making over $100,000 a year and they'll institute a corporate income tax as well. The Libertarian dream of no taxes, no government and endless "Lib-urrrr-teeee" has become Nevada's doomsday nightmare. No new taxes is falling off the historical hay wagon like drunk driving, beating your wife and kids and firing your gun anywhere in town at anytime. Sorry you lunkheads, you confused your cave with the real world.