Harry Reid spokesman says some federal relief possible for state budget woes

By Cy Ryan

Thursday, Nov. 18, 2010 | 9:45 a.m.

CARSON CITY – Senate Majority Leader Harry Reid will be happy to try to extend relief to Nevada, his spokesman said, which is facing a $215 million shortfall in its Medicaid program.

But he’s non-committal on whether he will push for legislation to cancel or reduce the $105 million the state will owe in interest to the federal government, which loaned Nevada money to pay benefits to unemployed workers.

Reid met with Gov.-elect Brian Sandoval on Tuesday in Washington, D.C., to discuss those two topics.

Sandoval’s Deputy Chief of Staff Dale Erquiaga told reporters Wednesday that unless the federal laws are changed the state will have to pour an additional $215 million during the next two fiscal years into Medicaid, the program that provides medical care for the poor.

Nevada and the federal government traditionally shared the cost of the fast-growing Medicaid program. But after the stimulus package was passed, the federal share rose to 63.9 percent in 2008.

Now the federal share will sink to 55 percent, causing the state to pick up the extra cost during the next two fiscal years.

Tom Brede, spokesman for Reid, said it was the work of the senator that netted Nevada an extra $500 million for the federal share for Medicaid.

Brede added that Reid “is happy to try to provide more relief to the state than he already has, but he’ll need Republican votes for it in both the Senate and House.”

Earlier this year, Gov. Jim Gibbons dispatched a letter to the Nevada congressional delegation asking for help with Medicaid.

Due to high unemployment in Nevada, the state has had to borrow anywhere from $750 million to $1 billion to pay jobless workers their 26 weeks of benefits.

Erquiaga said the state must start repaying the $105 million in interest on that loan starting next September. He says the state, not Nevada employers, are liable for that.

Erquiaga said the governor-elect wants some help from the federal government to ease or eliminate that payment.

Employer tax rates are also expected to rise from an average of 1.33 percent to 2 percent starting in January to replenish the depleted Nevada fund.

Brede says Reid’s priority is extending unemployment benefits for those who have lost their jobs. Unless Congress votes to extend the federal program an estimated 38,000 unemployed in Nevada will lose their monthly checks.

Asked whether the senator would work to eliminate or reduce the interest, Brede said, “Whatever shape any potential plan on unemployment insurance takes, it will require support and cooperation from Republicans to get it done.”