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August 1, 2014

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State budget plan heavy on cuts, light on solutions

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AP Photo/Rich Pedroncelli

Lawmakers and guests give Gov. Brian Sandoval a standing ovation for remarks made during his first State of the State address given before a joint session of the Nevada Legislature in Carson City on Monday, Jan. 24, 2011.

Sandoval's State of the State

Gov. Brian Sandoval, center, leads a standing ovation for a pair of Nevada servicemen who were decorated for their actions in Afghanistan, while making his first State of the State address before a joint session of the Nevada Legislature in Carson City on Monday, Jan. 24, 2011. Lt. Col Tony Millican, who is stationed at Nellis Air Force Base, received the Bronze Star and the Air Force's Lance P. Sijan Award for heroism. Spl. Ernesto Padilla, of the Nevada National Guard received the Purple Heart for wounds he suffered from a road side blast that tore his vehicle in half. Launch slideshow »

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Sun Coverage

Everyone knew Gov. Brian Sandoval would present a budget without tax increases. He repeated that promise umpteen times over the past year.

What was surprising was that his budget, unveiled Monday, looks much like the one proposed by his predecessor, Jim Gibbons, in 2009 that was rejected by the Legislature: short on bold initiatives, long on kicking the proverbial can down the road by dodging permanent solutions.

Sandoval — who arrived at the state Capitol with a stellar reputation, an experienced staff and the endorsement of more voters than any other politician in November — not only kept his promise not to raise taxes but actually lowered them for Nevada’s largest employers.

He failed to keep his promise of limiting general fund spending to under $5.3 billion — the amount of tax revenue projected by the state’s official forecasters. (Total general fund spending would be $5.8 billion under his spending plan.)

How did he accomplish his task? With cuts to K-12 schools, higher education, state worker pay, combined with the sleights of hand that have become familiar in recent years. The Sandoval administration called them $1 billion in “revenue reallocations.” They include:

• Selling bonds against future tax revenue to raise $190 million.

• Using $425 million in school construction funds to pay for education operating costs.

• Redirecting $200 million in hotel room tax revenue set aside for education to the general fund.

Sandoval’s aides tried to spin it as a more thoughtful approach than Gibbons’. And in his speech, Sandoval said “spending cuts alone could not do the work of balancing the state budget in a reasonable, thoughtful manner.”

His budget does restore some cuts that had been proposed to health and human services. But more notably, it leaves tough choices to others to make:

• He won’t have to be in the room when school boards decide how to absorb cuts, either through teacher layoffs or pay reductions.

• Higher education bureaucrats and the elected Board of Regents will make decisions on closing departments and/or raising tuition and fees to deal with a cut to funding of 22 percent.

• Clark and Washoe counties will have to decide how to fund their child welfare systems — child abuse investigations, foster care, and adoptions — with less money. In the past the state and county operated them jointly. Now, the state will issue a “block grant” that will allow more flexibility in how it’s spent, but in the case of Clark County, totals are about $19 million less than the county requested. The county will decide how to provide those services with less money.

Here is how Sandoval’s spending plan plays out:

K-12

Nevada, which has always hovered near the bottom of spending per pupil nationally, would spend $270 less per pupil, or $4,918.

The governor has proposed a cut to schools of 9 percent. But he reduces that to 5.2 percent by taking money from school district construction coffers to pay for operations. Additionally, he shifts to the general fund $200 million in room tax money earmarked for schools.

Not since 2007 has per-pupil funding hovered below $5,000. And since then the system has seen the addition of 12,000 students and costs increase on things such as power, according to the Nevada Education Department.

He said he hoped to use the room tax revenue to fund a teacher performance program, but “we must live with current realities.” Instead, a teacher performance program will be funded with $20 million.

Higher education

Sandoval is cutting more than $280 million in state spending on higher education.

But he is also providing the system with an ongoing source of revenue from local governments, diverting 9 cents of Clark and Washoe counties’ property taxes to higher education.

The property tax — it equals $121 million over the next two years — collected in Clark County will fund UNLV while Washoe County’s revenue will fund UNR.

The shift is permanent, and the amount will rise and fall with property values.

According to Sandoval’s numbers, the higher education system would lose 18 percent of its funding compared with the past two years.

Students could bear the brunt of the cuts as Sandoval tries to wean the system off state support. He’ll be giving universities more control over revenue raised from tuition increases.

Good news for students: Sandoval’s budget preserves the Millennium Scholarship until 2016.

Local governments

Sandoval’s budget would take money from local governments to fund some state services and end state funding for other services.

For example, the state would take county money for elder protective services and youth parole services. Sandoval would also eliminate state funding for some programs jointly run by the counties and the state, such as juvenile justice programs and emergency assistance for people on welfare. It would be up to the counties whether they would cut or maintain those services, administration officials said.

Click to enlarge photo

Gov. Brian Sandoval makes his first State of the State address before a joint session of the Nevada Legislature as Assembly Speaker-elect John Oceguera, D-Las Vegas, background, looks on, in Carson City on Monday, Jan. 24, 2011.

Together, those closed the state’s budget hole by $136 million.

That’s on top of the governor redirecting $131 million from Washoe and Clark counties property taxes to higher education and the $425 million taken from 12 school districts’ school building and maintenance accounts.

Health and human services

The department that makes sure the state’s needy, elderly, disabled and mentally ill are taken care of will lose only $10 million.

The department’s budget will be relatively flat compared with the last biennium. But that doesn’t take into account a spike in caseloads as the economy has plummeted.

To offset the expense of more people on Medicaid, food stamps and temporary assistance rolls, Sandoval is proposing $275 million in cuts to existing services.

Doctors who treat Medicaid patients will see their reimbursements cut by 15 percent to 25 percent. State funding for mental health services, such as triage centers and psychosocial rehabilitation will be eliminated. A property tax assistance program for senior citizens will be done away with.

Sandoval avoided many of the grim cuts agencies had proposed to Gibbons: families with autistic children will still receive assistance, as will traumatic brain injury patients; personal care attendants will still be funded, keeping elderly and disabled patients out of nursing homes; and Medicaid patients will still receive dentures, prosthetics and hearing aids.

Economic development/business

Sandoval sent a business-friendly message: His budget will keep taxes low. For the state’s largest employers and on sales tax, the rates will actually drop to pre-2009 levels when temporary tax increases expire June 30.

It also adds $10 million in economic development incentives to attract businesses to Nevada.

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  1. I responded to the "give me some ideas" online "Sandoval Hotline" that Scott Dickensheets posted in one of his columns.

    Even if were a total wacko (and there's been talk LOL), there should have been "some" response...

    ...even a "thank you for trying to help, but we have determined that you are either stupid or insane. Get help. Thank you."

    It is possible that we are looking at the LAZIEST, MOST APATHETIC, WINDBAG politicians in history.

    ...and that's saying something...

    ...because that wasn't an insult.

    It was a multi-level assessment.

    And from Scott's last column (incredibly creative and insightful BTW)...he agrees with my assessment.

  2. The situation never looked good. And maybe we should wait for the actual budget proposal by the Governor to see what he will actually do rather than react to what he says he will do. But the Governor's "plan" is starting to make California seem like sanity and reason by comparison.

    California resorted to every one of these budget gimmicks. So did Texas. So did Illinois. So have many states. And the result was that all of them have larger budget deficits as a percentage of GDP than Nevada.

    These tricks don't work. They haven't worked in other states. They haven't worked for "high" tax States. They haven't worked for "low" tax States. They haven't worked in "Liberal" States or in "Conservative" States, or in "centrist" States. Every place they have been tried they just made things worse.

    And so, according to the Governor's speech, we are going to ignore experience, copy what doesn't work elsewhere, hasn't worked for us here, and expect that it will work -- that this time, the result will be different because this is Nevada with a Governor named Sandoval. We don't need to make tough decisions or hard choices. because he is "optimistic." We are going to rely on accounting gimmicks, Rosy Scenarios, theft from Clark and Washoe, and misapplication of bond funds. (Sanity, we don't need no stinkin' sanity.)

    If the guy really plans to do what he said in his speech, he will put Nevada into the quicksand.

  3. K-12 spending in Nevada is actually around $11,000 per pupil. Excluding debt repayment and capital projects, the spending is around $8,500 dollars.

    The $5,000 number here is simply the Basic Support - it is an amount guaranteed by the state should local taxes fall short. The state's portion of this is actually less than $5,000 since the bulk is made up by local taxes (or state taxes collected locally).

    So far K-12 education has remained relatively unscathed from budget cuts.

    For example the Clark County School District has seen its operating budget PER PUPIL decline by a mere 1 percent since 2007. 2007 was the peak.

  4. Governor Sandoval said 17.66 percent when including the loss of the one time federal stimulus (money Klaich and other higher ed officials acted like never existed when they previously misled the public about the size of the budget cuts).

    That said, this is 17 percent of the operating budget which in itself is about half of the total spending at the university level. So as a percentage of the total budget, I expect the cuts to be less than 10 percent. And with the universities expected to increase tuition and fees the magnitude of the cuts will be reduced even more.

  5. So everyone must share in the sacrifice to fix the states financial problems. Just exactly who is everyone? Tax rates aren't changing for the mining industry or casinos or business or anyone. Certainly Education, Mental Health, other state and local employees will share but who else? The citizens of Nevada will soon find out they will share.

    Wouldn't it be sharing if everyone felt a little pain to share in raising enough money to pay the bills? There have already been major cuts to state employees and now there will be many more but it won't end there. Now with the new PUSH DOWN plan local government services will also face more job losses and reduced services which will finally demonstrate to all Nevada citizens that as a society we require government services in order to function.

    The real solution to the deficit is cash flow and the only way to increase cash flow is to generate more money. Raise taxes on everyone including the mining, casino, business and citizens. We all need to share in the pain. If you believe increased taxes will drive everyone into bankruptcy than you have truly had a big drink of the kool-aid.

    By the way, when a business gets into financial trouble and big or small they all do at one time or another. Tough decisions must be made to save the company from going bankrupt. Those decisions are not made by liberals or conservatives, Republicans or Democratics rather by good business/accounting practices which will increase the cash flow of the business in order to save it from going under.

    Is the Governor's plan a good business plan or a good political plan?

  6. Gotta love the headline: "heavy on cuts, light on solutions". Uh, cuts ARE the solution. The alternative is more fleecing of the taxpayers, which is the liberals' alternative, no matter how they try to disguise it.

  7. Several have suggested the people are willing to pay higher taxes to support schools.

    I suggest we ask parents of students to voluntily support the school system. Parents would be asked to donate to the school that their student attends a monthly amount to cover the shortfall. I'm estimating this to be $30.00 per month per student.

    This will get parents interested and invested in there kids education. The value of a quality education far exceeds the $30 cost.