By:  Doug Busselman, Executive Vice President

Media reports have been extensive in their accounts of Nevada’s budget problems, and as Patrick Gibbons, with the Nevada Policy Research Institute notes, they have also been quite varied.  http://npri.org/publications/nevadas-budget-mysteries

The central message of the NPRI Nevada budget commentary is that if we can come to a conclusion as to the degree of the situation, we might not find things to be as dire as accounts suggest. 

Using some of the more believable numbers, along the lines of a $1.5 billion shortfall, Gibbons puts in perspective the relationship of how this amount fits into Nevada’s $18.2 billion total budget. 

“We keep hearing that, without new revenues, we’ll need to cut by 34 percent to shore up the budget,” Gibbons writes.  Then he raises the question, “Where does that number come from?”  (Since $1.5 billion is only a little more than 8 percent of the $18.2 billion total).

Digging into just the state’s general fund numbers, the need for the supposed 34 percent next biennium budget slashing still doesn’t work out.  (Here we’d like to put a highlight to the point of one of the more interesting factoids presented in Mr. Gibbons paper:  the Nevada general fund only makes up 37.5 percent of the total state budget – there’s another $11 billion – 62.5 percent –  in the total that doesn’t get much public attention.)  Gibbons notes that the general fund only decreased by 2.9 percent for fiscal Year  2008 and by 9.1 percent for fiscal Year 2009 – a total general fund decrease (for the biennium) of 6 percent. 

Could it be that by overstating the degree of the problem, someone might be trying to set the stage for tax increases which go beyond actual need?  We agree with the observation that “policymakers are taking advantage of everyone’s confusion.”

Presenting the sequence of how matters developed, Gibbons started with the 2005 approved general fund appropriation of $5.8 billion.  Two years later (at the conclusion of the 2007 session) lawmakers allocated $6.8 billion for the 2008 and 2009 time-span.  According to the reports from the Economic Forum, the actual general fund revenue for fiscal year was $3.05 billion and the projected 2009 fiscal year total is anticipated at $2.78 billion – ($3.05 plus $2.78 equals $5.83) – wait a minute! That’s about the same amount as the level as where we were. 

Does that mean the unbelievably disastrous, insurmountable budgetary hole that can only be resolved with tax increases, really only be shortfalls in what was projected to be increases in revenue? 

When you use the “B” word as in “Billion”, it might get overly confusing…so let’s use numbers that might seem simpler…if you receive $5.80 (five dollars and eighty cents) one time and you estimate that the next time someone gives you money it will be $6.80 (six dollars and eighty cents) – however, when you get the money it is only $5.83 cents (five dollars and eighty three cents).  Did actually you lose anything?

Thank you to the Nevada Policy Research Institute for their continued efforts to look into the specifics and share their findings with Nevada’s citizens.  Being more aware, allows for us to be better prepared to ask important questions when Legislators gather in Carson City to debate how much higher they want to raise taxes.

We need to continue to focus our attention on having these elected representatives detail the specifics of what are we buying with the money being spent.  If they are going to raise revenue (using new taxes or increases in existing taxes) we should also be given an explanation on what more we’re going to get.