Nevada lawmakers will face an unprecedented challenge this week of finding more than $1 billion, either in budget cuts or tax increases, to cover a deficit caused by the economic downturn from the pandemic.
Exactly how one-fifth of the state’s $5.2 billion budget will be trimmed or where the money to fully fund it will come from has not been publicly released. Neither Gov. Steve Sisolak, his fellow Democrats who lead the state Senate and Assembly, nor minority Republican leaders have revealed details of any plans heading into a special session of Legislature that begins Wednesday but is closed to the public out of coronavirus concerns.
Here’s what is known: Sisolak late last month indicated that $900 million of the expected $1.3 billion deficit for the fiscal year that began July 1 would come from the state’s general fund. The fund is the source of much of the operating revenue for multiple state departments, including the Department of Health and Human Services and the Department of Education.
Assembly Minority Leader Robin Titus, R-Wellington, said the details haven’t been released because the numbers are constantly changing. Democratic legislative leaders also wouldn’t give specifics on the plan. All departments are discussing what cuts are possible and there are still “lots of questions” about what the state can “afford to do,” Titus said.
“I think it’s going to be universal cutbacks,” Titus said. “Everybody’s going to have to give a little. We have to maintain public safety, we have to maintain public health, and to what extent can we do that.”
Sisolak previously said he would use the time leading up to the special session to “evaluate the most up-to-date revenue forecasts with the hope of mitigating the most severe reductions in the fiscal year 2021 budget proposal.”
Funding for the state Department of Education takes up 34.7% of the general fund, the largest portion in the current budget cycle, according to the Guinn Center, a Nevada think tank. The Clark County School District’s plan to reopen schools with partial in-person learning calls for $84.6 million in additional funding for transportation, cleaning, personal protective equipment and more. Potential cuts could affect the plan, which school board members will be asked to approve Thursday.
Department of Health and Human Services funding is the second-largest portion of general fund dollars, making up 33.7% of the state’s budget. The department runs vital programs such as the Supplemental Nutrition Assistance Program and Child and Family Services. During the pandemic, they’ve hosted the Nevada Health Response site to provide residents with coronavirus news.
Titus, a physician, said it was important to not reduce preventative health measures too harshly, as it could exacerbate health issues and have the opposite effect on state finances. It’s better, and cheaper, she said, to have some programs in place to help people before their health issues get bad enough to justify a trip to the emergency room.
Assembly Speaker Jason Frierson, D-Las Vegas, said he wouldn’t comment until after the holiday weekend, but acknowledged in a statement to the Sun that lawmakers “have to make cuts to services.” He also urged the U.S. Senate to adopt a House bill that would provide further federal aid to states. Senate Majority Leader Nicole Cannizzaro, D-Las Vegas, was also not available for comment.
Sisolak in mid-June said the state would not be able to avoid “severe reductions in general fund support for agencies and services that represent the majority of the general fund expenditures” without federal help.
In early April, weeks after the shutdown of nonessential businesses across Nevada, Sisolak told state agencies to prepare for cuts for both fiscal year 2020, which ended June 30, and fiscal year 2021. Agencies, under the governor’s directive, agencies prepared a 4% cut for fiscal year 2020 and a 6% to 14% cut for fiscal year 2021.
Sisolak’s proposed cuts to state agencies in fiscal year 2020, which were approved by the Interim Finance Committee on June 26, were $3.05 million from the governor’s office, $7.88 million from the Department of Education, $14.4 million from the Nevada System of Higher Education and $19.1 million from the Department of Health and Human Services.
The governor proposed a freeze on merit pay increases for state employees until at least July 1, 2021, and also mandated one furlough day a month for workers in the state bureaucracy. State Sen. Joyce Woodhouse, D-Henderson, said furloughs would “go a long ways toward helping” and save the state around $10 million a month — a total savings of around $120 million during the fiscal year.
Assemblyman Jim Wheeler, R-Minden, said he doesn’t think any agencies or departments would bear the brunt of cuts.
“We did see some agencies close down during the (pandemic), where we just sent some people home and paid them. Well, we might want to look at some of those agencies, for instance, and see if cuts can be made,” Wheeler said. “Because obviously they can be closed for a couple of months without too much adverse effect.”
Finding new revenue streams to offset cuts will likely be difficult. Woodhouse said she couldn’t speak to the possibility of a tax increase, and there’s been little appetite expressed by lawmakers to do so. Assemblywoman Teresa Benitez-Thompson, D-Reno, a majority floor leader, has called a tax increase unlikely due to the format of a special session.
“It’s not a good venue to try to vet and create a tax structure,” she said. “I’ve served on the tax committee for a decade now, and every time we’ve discussed taxes they’re been public hearings. And you have to have that; you want public input, you want stakeholder input.”
Hearings on tax issues, she said, can last for hours and hours. Special sessions typically are only a few days long. Public input will also be limited to teleconferencing during the session, due to safety concerns around the coronavirus pandemic.
Sisolak has not made many gestures toward a potential tax increase. In a June 15 news conference, Sisolak would not rule out tackling taxes but hinted it could be difficult to persuade him to back a potential increase.
“I know it’s difficult for me to even think about raising taxes when I’ve got families that are still unemployed, they’re still waiting to get back to work and don’t want to impact those at all, but it’s going to depend on what the Legislature comes up with,” Sisolak said.
Relying on help from the federal government is also a no-go for many lawmakers. Titus said she saw potential problems arising if the state prepared for more help from the government than actually arrives.
It’s not yet known the extent of the help coming to states from the federal government, with the current debate centered on another omnibus bill — the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act — not yet taken up by the Senate.
Wheeler also said it would be “prudent” to act during the special session as if help from the federal government was not coming. “When we go into (2021) session by February, we should know pretty well if the federal government’s going to help us out or not,” Wheeler said.
There’s another unknown for the session besides the breakdown of budget cuts. When the session was announced, Sisolak’s office said the governor and legislative leadership were discussing the addition of other issues, including “policy proposals related to criminal and social justice reform.”
Both Titus and Wheeler said they wanted the session to strictly tackle the budget. The extent to which any other issues will be brought up is not yet known.
The Marshall Project, a nonprofit that covers criminal justice, reports that lawmakers in 16 states have acted in some capacity on policing issues after the death of Minneapolis resident George Floyd in police custody on May 25. Floyd’s death has sparked continuous protests throughout the country, including in Las Vegas and Reno.
The special session’s parameters, which lawmakers must follow in developing legislation, are expected to be released in a formal proclamation from the governor’s office.