Las Vegas Sun

March 29, 2024

Political Memo:

State budgeting, in earnest, begins Monday

Brian Sandoval

Brian Sandoval

Andrew Clinger

Andrew Clinger

Monday we will know.

Monday we will know how much money the state will have to spend in the next two years.

We will know whether Gov. Brian Sandoval — nicknamed Gov. Sunny by some commentators — was smartly optimistic or wallowing in wishful thinking.

We will know whether legislative Democrats’ almost desperate plea for new taxes will be dulled by a projection of greater-than-expected revenue, or sharpened by the lack of it.

On Monday, the Economic Forum, a panel of business leaders given the authority by state law to project the revenue on which the state budget must be built, will meet to decide its forecasts for the state’s major tax streams, including sales, gaming, insurance premium and payroll.

It’s the number that Democratic leaders have said they need in hand before they can go public with a specific tax plan. It’s the number that Sandoval has been waiting on to see if he can claim credit for plugging more money into education than he originally proposed.

Sandoval has scheduled a speech to be televised statewide Tuesday evening to talk about the new numbers.

In December, the forum met to come up with the numbers Sandoval used to build his proposed budget. On Monday it updates those forecasts.

The Economic Forum exists to take the politics out of revenue forecasting.

Instead of the governor’s office or the legislative staff reading the economic tea leaves to come up with a number most favorable to their political aims, the nonpartisan Economic Forum does.

But the fact an independent panel comes up with the number doesn’t mean there won’t be political wrangling over the outcome.

In fact, it has begun.

Since the recession began, the Economic Forum has repeatedly lowered its projections as the economy slid. That has led to some gun-shy forecasts that tended to the conservative side.

Despite that, most expect projections this time will come in higher than the original forecasts in December. Over the past fiscal year, sales tax revenue has been coming in at a higher-than-expected rate while gaming tax has lagged the forum’s projections.

Minor tax revenue streams, such as net proceeds on minerals and unclaimed property funds, which were set by a different committee last week, came in $72 million higher than projected in December.

“I would say we’ll get somewhere between $100 million and $200 million,” Sandoval’s budget Director Andrew Clinger said last week.

Democratic sources in the Legislature pegged the number much lower, reflecting the political tug-of-war over the number.

Sandoval has vowed to direct any new revenue projected by the forum toward offsetting the more than $700 million in education cuts he’s proposed in his budget.

His message to the public: Look, I’m increasing funding for education.

The reality would be merely smaller cuts. But the amount he could add back is significant.

Business leaders have voiced the most concern over cuts to higher education and public schools. That concern peaked six months ago, when Sandoval said he would build his budget using only the $5.3 billion in available revenue.

In the meantime, Sandoval came up with an additional $500 million for education by grabbing money from school districts’ debt reserves, developing a scheme to borrow $170 million against future revenue and diverting county property tax dollars to the university system.

Those maneuvers mitigated some concern from the business community.

If the Economic Forum comes in substantially higher than it did in December and Sandoval gives the money to education, it could deprive Democrats of leverage over key business constituencies squeamish about backing a tax increase.

As veteran lobbyist Greg Ferraro put it: “The session really starts on Tuesday.”

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