Nevada not alone in the red


A ballooning budget deficit. A reeling economy. Caterwauling from the state's higher education system about "Draconian cuts." A Republican chief executive who insists that the state, like its citizens, must live within its means during difficult times.

Nevada Democrats like to think they have a monopoly on these narratives -- that declining tax collections, red ink and an uncompromising governor are unique to this state.

But these exact headlines are dominating the news from our neighbor the southeast. Arizona faces a $1.3 billion revenue shortfall for the fiscal year ending June 30. Next year, funding for the state's roughly $10 billion general fund is expected to come up between $2.7 billion and $3 billion short.

Arizona Gov. Janet Napolitano is expected to resign this week to become President Barack Obama's director of Homeland Security. The Democrat's final spending plan proposed increasing K-12 funding, making limited cuts to colleges and universities and borrowing $1.3 billion, repaying the sum with future proceeds from the state's lottery and its settlement with tobacco companies.

But Republican Secretary of State Jan Brewer, who will succeed Ms. Napolitano as early as today, has made it clear that putting state government deeper into debt to fund operating expenses during a recession is not an option.

"I think the people of the state of Arizona, the people of the business community, the people in general, including some legislators, are in total denial of what this problem is and how big it is," Ms. Brewer told Arizona's Capitol Media Services. "We would be in denial if we sat here and said we're going to solve this without making cuts in education."

Ms. Brewer says Arizona is paying the price for expanding state programs and services even as tax collections lagged. About one in six Arizona residents currently receives Medicaid benefits, and children qualify for almost fully subsidized health care if their parents' income is "only" twice the poverty level.

Arizona's Republican-controlled Legislature has little appetite for tax increases. Instead, they've proposed cutting university budgets by about 25 percent.

"We simply cannot work our way out of this situation by cutting, cutting, cutting," University of Arizona President Robert Shelton told the Arizona Daily Star.

Does all this sound familiar?

Nevada Gov. Jim Gibbons has proposed a two-year budget of $6.2 billion that's $2.3 billion short of what state agencies say is needed to maintain programs and services at current levels. To make up for that revenue shortfall without massive layoffs, he has proposed across-the-board 6 percent salary cuts for public employees, a voter-approved 3-percentage-point increase in the hotel room tax rate, diverting property tax revenues from Clark and Washoe counties and steep cuts to the higher education system. Nevada's community colleges and universities would have to make do with one-third less state funding than they received this biennium.

"This is wrong. It is fundamentally wrong," said Michael Wixom, chairman of the Nevada Board of Regents.

Right or wrong, Nevada and Arizona are in nearly the same place -- albeit at different scales.

But if you believe Nevada's legislative Democrats, such struggles are exclusive to Nevada because of an "unstable" tax system that must be "restructured."

Funny, but Arizona has the taxes Nevada's government groupies most adore. Arizona has a personal income tax. Arizona has a corporate income tax. It has a high state sales tax rate to go with property taxes. Arizona's tax structure has, as some are fond of saying, three legs on its stool.

Yet that hasn't saved Arizona from the fact that when the economy is in the tank, government tax collections don't continue growing. And, despite the rhetoric from Nevada Democrats about the need to overhaul this state's tax structure, it won't save the Silver State, either.

But once the Legislature is in session, facts tend to get in the way of tax-increasing agendas.

 

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