Governor’s Budget is Optimistic

By Bryan Wachter

In his State of the State Address on January 19th, Nevada Governor Steve Sisolak outlined his budget for the upcoming biennium, and at no surprise to anyone, his budget will favor Nevada’s public employees and unions. This budget raises red flags, but so far will rely on federal stimulus funds, and not additional tax dollars, to make it balance. The proposed general fund budget is $8.69 billion for the next two years, a 2% decrease from the previous biennium, and the overall budget is $27.1 billion, which is up $1.3 from the previous budget.

In his budget, Governor Sisolak has made sure the public sector will be kept whole while Nevada’s private sector is struggling. His plan will eliminate state worker furloughs, provide raises for teachers and additional money for state employee retirement contributions, including expanded benefits for public employees to include a new low deductible co-pay option.

The plan includes little help for Nevada’s struggling private sector. With the exception of one-shot funding for immediate small business assistance, all additional spending reversed many of the cuts that were taken during the interim. This support is miniscule when compared to the amount of funding allocated for a new medical school at UNLV and new programs for K-12.

Overall, the budget is optimistic. It adjusts projections considering December 2020 revenues exceeded expectations, and it relies heavily on federal funding. According to his office, K-12 and higher education are expected to receive significant support from the federal government; however, those numbers and federal guidance have not yet been made available and were not included in the budget. According to the Governor’s Office of Finance, federal dollars are projected to make up 40% of the total state spending, with a majority of that money being used for Medicaid, the largest single budget in the state, followed by education.

This budget is nothing new. In fact, it too misses the opportunity for there to be a critical and necessary conversation of how Nevada will emerge from this crisis. The budget, with federal support, may be solvent for this biennium, but there is no preparation being made for Nevada’s post-COVID future where gaming and tourism have yet to return to their prior levels. As the legislative rumor mill fires up, we are hearing the Democratic leadership is keeping tax hikes on the table to fund spending priorities. Now more than ever the governor and legislative leadership need to thoughtfully review whether there are better ways of doing business instead of ratcheting up the rates of existing taxes. RAN is continuing to monitor and encourage the governor and legislature to look at ways we can better use our existing tax base without heavy reliance on more federal stimulus.