For many Nevada Democrats, the fundamental problem at the state level is the volatile and regressive tax structure. If we could just revamp how taxes are levied, they argue, we could solve a lot of our budget challenges.
But for Rory Reid, Democratic candidate for governor, tax reform is not the main concern. Reid recently issued his plan to address the state's looming budget deficit that makes no mention of taxes at all. Instead, he proposes a series of measures that would carve $2.5 billion out of the state budget.
"As I see it, this isn't the time to put additional burdens on people," Reid said in an interview this week.
Critics have said the absence of a tax increase in his budget-balancing plan is driven by politics, but Reid insists it's not so. "Everybody is saying you can't balance the budget without taxes, and I wanted to see if I could," he said. "So I picked a target, $2.5 billion, and I started to build toward that number."
Reid's plan would significantly downsize the state government by eliminating departments and agencies. For example, he would consolidate the Commission on Economic Development, the Department of Business & Industry, the Tourism Commission and the Department of Cultural Affairs into one "Department of Economic Development." Through this process he would eliminate a number of administrative positions. He said this is the opposite tack of Gov. Jim Gibbons, whose budget cuts have hit primarily at the blue-collar level.
"The people who have lost their jobs in state government are line-level employees, and I don't think at the managerial and administrative level that anything has been done," he said. "I've tried to change the focus, because I think that's appropriate."
Reid said Medicaid reforms could save the state tens of millions of dollars. "Medicaid is a huge chunk of the budget," he said. "It's over a billion dollars. Some of that is federal money but about $700 million of it is state money, and we just do it poorly. There's an incredible amount of fraud. We'll save tens of millions if we just do some things that other states have done to crack down on that."
Nevada, he said, retains a costly warehousing mentality when it comes to long-term care of elderly citizens. "Nevada has a higher ratio of nursing home care than any other state," he said. "If you're a Medicaid patient in a nursing home, depending on your acuity, you get between $150 and $300. If you're a Medicaid patient in adult day care, it's $48. It's between three and six times more expensive to just put everybody in a nursing home. Additionally, the quality of life is much better if you're in a short-term or community care facility."
We're spending too much money on incarceration as well, Reid said. "Forty-two percent of the prisoners are there because they are addicted to something, drugs or alcohol," he said. "Other states have all these diversion programs where you get those people out of the system so you don't have to warehouse them and so you're saving money, and you treat their addiction and you don't have the recidivism rate."
Some economic experts believe the state's deficit over the next two years could reach $3 billion but Reid calls that a guess, and says it's too high. "I picked $2.5 billion because I think it's a realistic number," he said.
Referring to the Economic Forum, the advisory panel that tries to predict how much state tax revenue the Legislature will have to work with, Reid points out that the latest projections are extremely gloomy, showing a dramatic drop-off in state revenues in 2011 and 2012 from the current dismal situation. "I don't think that the economy will be 50 percent worse in two years than it is today," he said. "That's hard to imagine, as bad as it is today."
Nevada's economy also will be boosted by the energy sector, Reid said. "There are $5 billion of energy projects that are either approved and about to begin construction or in the queue," he said. "There are almost 4,000 megawatts of geothermal in development in Northern Nevada, there are thousands of megawatts of solar, and there's also wind. I believe we are going to see the benefit of that."
Reid's overarching goal is to refocus the conversation on the long term. "We never have done that well," he said. "We're real good at the short-term stuff. We take out our bubble gum and our Scotch tape and we cobble together some short-term solution that we think is going to get us through to the next legislative session. We've become expert at that."
Instead, he said, "what's important is to first decide what we want to be, and then price that and figure out how we're going to pay for it. I think we've done it backwards in Nevada for decades."
In my Aug. 20 column, I incorrectly described the late Richard Hofstadter as a political scientist. He was a historian.
Geoff Schumacher (email@example.com) is the Review-Journal's director of community publications. His column appears Friday.