Gibbons points to stimulus strings

CARSON CITY -- Though he expressed concerns, Gov. Jim Gibbons did not rule out accepting a controversial $77 million portion of $286 million in unemployment funds available to Nevada through the federal economic stimulus law.

During a news conference, Gibbons called the strings the federal government has placed on these funds a "usurpation of state rights" and an "unfunded mandate."

"There is no reason to jump through hoops on this," Gibbons added. "There are some real serious questions."

The $77 million would allow about 4,100 laid-off Nevadans who do not qualify for payments under law to start to receive unemployment checks.

Assembly Speaker Barbara Buckley, D-Las Vegas, said these Nevadans are primarily minimum wage and construction workers.

"We have an opportunity if we take these funds to stimulate the economy," Buckley said during a joint Senate-Assembly budget hearing earlier Wednesday. "The money that goes into their pockets will be spent."

With the $77 million, Buckley said Nevada will have enough money to continue paying benefits for these workers at least until 2013 and probably until 2018.

The Las Vegas Chamber of Commerce joined the AFL-CIO and Culinary Local 226 in supporting legislation to secure the money.

"We need to be cognizant of the long-term risk, but we believe the benefits outweigh the risk," said Veronica Meter, a lobbyist for the Chamber of Commerce.

Mendy Elliot, Gibbons' deputy secretary of staff, said the governor's staff still is analyzing whether to accept all of the unemployment money. She expects a decision by the end of the week.

Under federal law, if Nevada accepts the $77 million portion of the stimulus funds, it cannot place a "sunset," a date, when it no longer would provide benefits to the new class of unemployed workers.

Gibbons fears the clause creates a long-term liability for Nevada that could end up increasing unemployment taxes paid by employers.

Neither the governor nor Democratic legislative leaders oppose accepting the other $209 million portion of stimulus funds for the unemployed. These funds are expected to expire in 2010.

Through them, the federal government would pay the state's 50 percent share of the current cost of extending by 13 weeks unemployment benefits to workers.

That is beyond the 59 weeks in benefits workers already can receive from state and federal governments.

The money also would allow Nevada to offer an additional seven weeks of coverage to workers who are close to exhausting their benefits. That means if the entire $286 million is taken by the state, unemployed workers could receive benefits for as long as 79 weeks. The average benefit a Nevada worker receives is about $300 a week.

Despite the clause forbidding states from setting a sunset, Buckley insisted the Legislature could repeal the federal requirement at a later date.

Assembly Minority Leader Bill Raggio, R-Reno, objected to that assertion, saying that the sunset clause was clear and that the state would have to continue providing benefits.

But Buckley remained adamant that the federal government cannot bind Nevada to continue benefits indefinitely.

"We are precluded from sunsetting, but we are not precluded from repealing," responded Buckley, saying she was not trying to "out-lawyer" Raggio.

Buckley has introduced Assembly Concurrent Resolution 17, which would allow the Legislature to take all of the unemployment stimulus funds even over Gibbons' objections. Governors do not sign resolutions.

But a companion bill, Assembly Bill 469, describes how the money would be spent. Gibbons could veto that measure.

No action was taken on either proposal. Legislators are expected to move on them within the next week.

During the Senate-Assembly hearing, Employment Security Division administrator Cindy Jones said taking the stimulus money would shore up temporarily the state's unemployment trust fund, which is expected to be depleted by the end of the year.

Her agency might have to borrow as much as $750 million in 2010 from the federal government to continue paying benefits to unemployed workers.

Nevada last needed a loan to cover unemployment benefits in 1974.

Contact Review-Journal Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.