Tuesday, Jan. 25, 2011 | 9:37 a.m.
- Soft words during State of the State hide Nevada in pain
- State budget heavy on cuts, light on solutions
- Teachers not pleased with most of Sandoval’s speech
- In response, Democrats say taxes might be part of budget solution
- Quotes on Sandoval’s budget, speech
- Sandoval calls for education overhaul, job cuts in State of the State
The budget Gov. Brian Sandoval presented to the Legislature this week relies on about $1 billion in new revenue, patched together mostly from local governments and school districts.
But he also proposed monetizing $190 million of the state’s insurance premium tax. That essentially means borrowing from future revenue. The state receives a lump sum of $190 million and must pay it off over the next four years.
The cost of doing that: $24 million in interest.
Over the years, Republicans have come up with a variety of monetization and securitization schemes. They’ve looked at the tobacco settlement funds and unclaimed property funds. Each time, Democrats reject the idea.
In a budget hearing this morning, the familiar refrain was sounded over the monetization plan.
“This is like taking out a second on my house to pay my bills,” Senate Majority Leader Steven Horsford said. “I think a lot of families that have done that have seen the consequences of that approach. It’s put people in bankruptcy. How is that proposal by the administration any different?”
Budget director Andrew Clinger said the monetization plan was not Sandoval’s “first choice.”
“But given the difficult choices that we face, some of the cuts we were originally on the table for, this is something we felt was necessary to try and protect services while trying to protect the economy at the same time,” he said.
Clinger said the revenue is necessary to offset some of the more severe cuts to services for the needy, disabled and elderly and to avoid a tax increase.
Horsford questioned the wisdom of requiring future Legislatures to find the money for the $54 million annual payment to pay off the note.
“It is a tax on our kids that are going to have to pay this in a future session,” he said.