Nevada’s overhyped budget ‘crisis’

REPORTS of Nevada’s impending budget crisis have been greatly exaggerated. For months, Gov. Steve Sisolak has tried to scare Nevadans about the state’s upcoming budget. “Nevada faces historic shortfalls as a result of COVID-19,” he said in a November statement. That statement said Nevada is facing “devastating impacts” to its budget. He directed state agencies to pare back spending plans by 12 percent.

If Sisolak thinks a 12 percent spending reduction is “devastating,” he should talk to the business owners that he’s forcing to operate at 25 percent capacity. Or find out what happens when a want-to-be king forcibly closes much of a state’s economy.

To many businesses and families, a 12 percent reduction in revenue would be a dream scenario coming out of 2020.

But Nevada government isn’t actually facing a 12 percent cut. Far from it. It’ll likely enjoy an increase in general fund spending.

Last legislative session, politicians agreed to $9.1 billion general fund budget. Because of the coronavirus and amplified by Sisolak’s egregious restrictions, tax revenue dropped. After the summer’s special session, the Legislature approved a two-year plan of $8.4 billion. For the current fiscal year, the budget is $4 billion. Sisolak and lawmakers drained the rainy day fund and used other gimmicks to balance the budget while limiting spending reductions.

The Economic Forum projects that Nevada will have $4.1 billion in revenue next year and $4.4 billion the following year. Sisolak will base his budget upon those forecasts.

You’ll notice that both numbers are larger than the $4 billion Nevada is spending this year. After those “devastating” 12 percent cuts, Nevada’s general fund may end up higher next year than this year. There is some nuance here. When the revenues inside the Distributive School Account drop, the general fund has to contribute more.

But those “cuts” aren’t based on actual spending reductions. Nevada agencies submit wish-list budgets, called “agency request” budgets. Agencies requested $9.7 billion in spending. Consider the arrogance at work. Nevada’s unemployment rate is more than 10 percent.

State bureaucrats don’t care. They wanted a 15 percent spending increase over the budget politicians approved during the special session. Because the money isn’t available for that, Sisolak is now moaning about 12 percent budget cuts.

The gall of this guy is really something. But this deception has a host of political benefits for Sisolak.

For starters, he gets to blame his inability to meet the insatiable demands of public employee unions on the lack of a federal bailout. A large part of the budget pinch will come from public employees who expect pay increases regardless of the state’s economy. Contributions to Nevada’s Public Employees’ Retirement System are going up, too. Sisolak has shown no interest in pension reform.

By pointing the finger, he avoids responsibility for blowing out the budget in 2019 and not taking proactive action to cut costs immediately after he shut down the state.

It also allows him to try to blame Republicans who don’t support tax increases. Any effort to raise taxes would require some Republican votes because of the two-thirds requirement. If the public understood the state’s actual budget situation, there would be little support for tax hikes, which public employees want to boost their wages.

Don’t believe Sisolak and Democrats’ spin and misinformation. The state budget is in better shape than they claim.