By:  Doug Busselman, Executive Vice President

The idea of setting aside when things are good is not a new idea.  I seem to recall a story from the Bible where in ancient Egypt a guy named Joseph interpreted some dreams coming up with the idea of storing up in good years in order to have food available during bad ones.  He passed this insight on to the Pharaoh in charge and got a big promotion for his idea.

Nevada Assembly Speaker, Barbara Buckley is offering a new twist to this idea with a legislative proposal AB 165 which was reported on by the Reno Gazette Journal in this article .

AB 165 is labeled as a “Forced Saving” plan for Nevada and it adds to current provisions on placing aside a formula-driven amount for a reserve account for the state. 

It’s a little complicated to follow through the gyrations of what percentage of that is going to be put aside, but at its core the proposal is oriented to putting more into the sock than what otherwise would be going into it under the current formula requires.

In some ways, by its automatic, formula nature, the approach makes "saving" another high priority for revenue.  Even though it’s not “spending” it takes a chunk of the revenue stream and allocates it for a purpose.

There is a definite value to saving money in the private sector, but how that translates over to the public arena requires some thought and consideration.  It also requires remembering that for citizens and businesses, revenue is earned.  For government, revenue is what’s taken away from private enterprise.

The net effect in the situation being dealt with now is that more revenue is going to be needed to “pay for” the savings that Nevada government is attempting to do.  Since there isn’t enough revenue to cover the spending that’s already wished for -- revenue enhancement (“Taxes” for those of us who have the wallets they’re reaching for) is going to need to be even more than it was going to be in order to finance the “savings”.

Based on the amount of money that it seems the Nevada Legislative body will want to “enhance”, the percentage changes in AB 165 might not seem to be that much of a deeper bite, but when you’re working at the scale they are…five percent here and a couple of percents there – it’s not too long and you’re dealing with real money.

Given the lack of a real concept of what priorities are priorities when it comes to spending, “saving” for a rainy day is even more of a challenge.  When writing out checks from the state’s checking account involves a fairly long list of “priorities” -- our “rainy days” might come quite frequently.

The reason for wanting a healthy reserve is go shore-up resources to allow for spending when the economy isn’t bringing in the steady flow of increased revenue that our Legislative body has gotten hooked on. 

We cannot forget to keep in perspective that our current “budget crisis” is not based on our revenue falling off a cliff – the flow of income coming into state coffers is basically flat. 

Level income (not falling) means you can’t increase spending the way some believe is necessary. 

The reason the last budget surplus isn’t sitting in the rainy day fund right now, is that spending increases were maintained when the revenue stream didn’t bring in the amount of “more” that was expected.

Saving money isn’t a bad idea, but if you can’t deal with spending within your means, how does saving get you where you need to be?