(Sean Whaley/Nevada News Bureau) – Nevada could find a way out of its $3 billion revenue shortfall next year without raising taxes, but only if the Legislature looks at restructuring the way the state and local governments provide and pay for services, the state’s top fiscal officer said yesterday.
State Budget Director Andrew Clinger, interviewed Monday on the Nevada NewsMakers television program, said the Legislature would also have to consider changes to the state’s collective bargaining law to get a handle on local government salaries, which he called “unsustainable.”
“I think there is a way to do it without raising taxes but you’re talking about some radical changes,” he said. “And I think the only way . . . to do it without raising taxes is you need to look at not only state government but you have to look at local government.”
Clinger said Nevada state government spends less money on its programs than other states. But when local government is added into the mix, the state falls into the middle of states on spending on government programs per capita.
The budget discussion in the upcoming legislative session would have to involve the potential shift of services between the government entities along with the revenues that would pay for them, he said.
In Nevada, property taxes pay for public education and local government but not state services. Sales and gaming taxes, along with the modified business tax and several other levies, are the revenues that fund state general fund government operations.
Clinger did not offer any specifics about what types of programs might be shifted as part of any realignment.
But Clinger said he does not see how the state’s potential $3 billion shortfall, which would approach 50 percent of what Nevada government needs to operate, from education to prisons, could be addressed solely with cuts at the state level.
The only program he mentioned during the interview was Nevada Check Up, a program funded by the state and federal government that provides health insurance to just under 22,000 low-income children who are not eligible for Medicaid. The program is costing the state general fund about $10.8 million this year. Another $25.4 million is coming from the federal government, funding that would be lost if the program was eliminated.
Clinger said the state’s collective bargaining statutes would also have to be part of any discussion by the governor and Legislature with local governments.
Clinger said the last surveys he reviewed showed state salaries about 7 percent ahead of the private sector, while local government salaries were running about 30 percent ahead of the private sector.
“You would have to open up the collective bargain statutes and make some changes there that could help sustain government moving forward because at those salary levels it is not sustainable,” he said.
State employees do not have collective bargaining rights in Nevada, although local government employees and teachers do.
Clinger said the $3 billion shortfall out of a two-year, $6.5 billion general fund budget can be partially addressed by actions the governor and Legislature can take on their own. State employee furloughs and benefit reductions, for example, could be continued for two more years at a savings of about $500 million, he said.
Much of the state budget shortfall is due to tax increases approved by lawmakers in 2009 that will expire unless extended, and the loss of future federal stimulus funds.
Assemblywoman Sheila Leslie, D-Reno, said she has heard concerns expressed by local government officials that there might be an effort to transfer state services to the local level.
“I have talked to several county commissioners who are quite concerned,” she said. “I think those discussions should be happening now if they are going to happen. I haven’t seen anyone organize a formal discussion.”
Leslie, who is running for an open seat in the state Senate, said she has heard there might be a list of programs that could be eliminated entirely or that could be potentially transferred to local government. But the counties do not have any surplus funds they could infuse into state programs if a transfer occurred, she said.
With a new governor coming in January and the two leading candidates for the job rejecting any call for new taxes as a solution to the state’s budget problems, not to mention a major turnover in the Legislature with the departure of long-time leaders, “we’re in a very tenuous spot,” Leslie said.
Clark County Commissioner Chris Giunchigliani, a former state lawmaker, said a discussion of which level of government should provide what services is worth having, but she questioned whether it would deliver enough savings to make a significant difference in the state’s budget shortfall.
“I don’t think you can cost shift your way out of the budget problems,” she said.
Giunchigliani said the Legislature should take a look at the study on broadening the state’s sales tax base by the Nevada Policy Research Institute as a starting point for a conversation on the state’s revenue structure.
While not in support of taxing food or medical devices, the study looks at spreading the sales tax over a wider base while at the same time reducing the overall rate, she said.
“It gives the Legislature something to take a look at, and local governments should weigh in,” Giunchigliani said.
Ben Kieckhefer, public information officer for the Nevada Department of Health and Human Services, which operates the Check Up program, said the trend his agency has seen is counties transferring programs to the state when possible due to funding concerns.
One recent example is the state having to pick up elder protective services from Clark County, which occurred on July 31, he said.