A brighter future

Wednesday, Jan. 5, 2011 | 2:01 a.m.

Declaring himself to be “proudly optimistic,” Gov. Brian Sandoval took office Monday with an upbeat tone. In his inaugural speech, Sandoval acknowledged the state’s problems, but he didn’t dwell on them. Instead, he painted a bright future for Nevada, noting improvements in various economic indicators, and asked people to “choose optimism” and the “promise of opportunity.”

“By 2014, we will emerge with a smaller, more efficient state government, an education system we can be proud of, and a supply of good jobs transformed by a forever-changed economy,” Sandoval said.

Inaugural speeches are intended to set broad themes for an administration, and Sandoval’s cheery tone is welcome. The state has been battered over the past few years at the hands of a particularly sour economy, and it needs some encouragement. The new governor is expected to detail how he plans to achieve his vision later this month when he presents his budget to the Legislature and delivers his State of the State address.

Sandoval and the Legislature are facing a two-year budget deficit of up to $3 billion. Sandoval and several lawmakers are already at odds over his no-new-taxes pledge. There will be further reductions to crucial services, which are suffering from previous rounds of budget cuts, and Sandoval has suggested pushing off state functions to local governments.

To put Nevada on a steady course, the governor and Legislature will have to do more than that. They will have to fix the endemic problems that plague the state budget. Nevada has an inequitable tax system that fails to raise sufficient revenue for necessary state services, particularly education. State leaders will have to look at employee pay and pension programs that have, in some cases, far outpaced the private sector.

In the past, governors and legislators haven’t mustered the political will to deal with the underlying issues. They have been content to find ways to simply close the budget gap, and they’ve been able to do so because the state’s economy has shown a remarkable resiliency, quickly rebounding to take the sting out of any downturn. But Nevada’s once “bulletproof” economy isn’t expected to rebound quickly this time.

The governor and lawmakers should closely consider a report being issued today by the nonpartisan Brookings Institution in conjunction with the Morrison Institute at Arizona State University. The study examines the problems with state budgets in several Western states, including Nevada, and finds that the strong economic growth over the past few decades allowed states “to expand public service provision as well as implement permanent tax cuts — with seemingly little thought as to how they might be sustained over the longer term.”

The report suggests that tax revenue won’t cover the need for services, particularly in the growing elderly and school-age populations.

The authors say in Nevada “the economic and demographic trends will interact with the tax system to create an especially harsh budget climate throughout the decade such that this state, which does not now struggle with a large structural deficit, will likely gain one.”

That is a sobering conclusion that should create a sense of urgency in Carson City. We believe Nevada can have a bright future, but state leaders are going to have to work together to solve the real issues first.