By:  Doug  Busselman, Executive Vice President

Perception and context are important details to establish and keep hold of.   Through various stimulation, our senses can be tricked into thinking that we’re falling, when we’re safely sitting on a level, unchanging place.

A recent Associated Press news account, http://www.rgj.com/article/20090102/NEWS/901020369/1321 drove home the point that keeping your bearings in understanding the details will be a must.

The news article described that as Nevada Governor Jim Gibbons prepares his budget for the coming biennium the prospects of deeper cuts are possible (in some areas), maybe even beyond the much heralded 34 percent figure that has been trumpeted as being a level, that in and of itself, is a certain sign of Armageddon.

The reason behind the slashing is the expected level of revenue projected by the Forum of economic advisors the state has created to watch what is going on with state revenue and then make projections on what they expect to happen going forward.  The most recent Forum projection indicates an expectation of $5.8 billion for the coming two-year budget cycle.

As has been noted several times here in “Kickin Up Dust”, thanks in great part to the analysis of the Nevada Policy Research Institute, this amount of forecast general fund revenue is about where it’s been the last two years and only slightly off the highpoint of $6.2 billion that flowed into the General Fund in Fiscal years 2006 and 2007.

The details of what’s actually perceived to be “the shortfall” was presented almost as an aside in the news report under the subhead indicating that Governor was still holding firm on his “No New Taxes” mantra…  The explanation was credited to Andrew Clinger, the Governor’s budget director and put in context the situation.  The story reported that the likely budget proposal by the Governor will be in the neighborhood of the $5.8 billion of expected revenue -- which is far below the $8.1 billion that Clinger said the state needs to cover the cost of maintaining services at current levels -- while accounting for inflation, population growth and other factors that drive up government spending.

If $8.1 is the actual level of need for the state’s general fund, we might need some specifics on how that amount is needed to give us “the same level of services, at current levels.”  If today’s level of services is based on expending revenue of about $5.8 billion – what exact amounts and specifics are going to cause this to “need to be” $8.1 in order to stay the same?  (That seems like a lot more to be no different.)

That’s what the legislative process and the budget work of the Senate Finance and Assembly Ways and Means Committees is all about.  The Governor proposes the budget and the Legislature, working through their committees, takes it from there. 

The challenge will be trying to keep perspective and context through the legislative process, given the very strong indications that are coming from those who are convinced that the only solutions are more taxes and a broader tax base.

As we have also stressed in several of our past post, getting a solid understanding of what we’re getting now, for the money being spent is vital.  It will be this basis that will allow us to get a handle on the “the level of services at current levels”.  Then we should be able to be better judges of whether it’s going to take over $2.3 billion (yes, BILLION) to keep us where we already are….