Governor wants to milk Dairy Commission for revenue

Gibbons signed a proclamation calling for the Legislature to, among other things, drain a long list of state accounts and commissions currently kept separate from Nevada government’s flagging general fund. At last count, $871 million needed to be cut from the budget in order to balance it, and Gibbons has vowed not to call for a tax increase.

The cream was skimmed from state government long ago. About all that’s left these days is evaporated milk.

The governor has painted himself into a corner with his "no new taxes" pledge, which leaves the state’s absurdly profitable gold mining industry sitting pretty for approximately the 150th year in a row. That world view has led him to look behind every couch cushion and empty every piggy bank in state government in an attempt to balance the budget.

And that brings us to those 25 funds and commissions that Gibbons appears to believe have been holding out on us. Of the bunch, my favorite is the state Dairy Commission.

Superficially, it looks like a perfect place to start killing the fatted calf, or in this case the 2 percent milk cow. After all, how many of you even knew Nevada had a Dairy Commission?

The Dairy Commission was created in 1955 to ensure quality milk products and protect dairy farmers. Cost-containment and quality control are its goals.

Trouble with slaughtering it is, it’s a self-funded, fee-based agency. It doesn’t draw from the general fund budget, Dairy Commission Executive Director Mark French says.

"People that distribute dairy products pay us," French says. "We charge assessments each month based on the products they distribute. The distributors are the ones that pay our funds."

The Dairy Commission’s funds are kept in part in a reserve account from which the commission pays its payroll, makes acquisitions, and balances its budget. Although the reserve account currently holds approximately $500,000, the money isn’t sitting there doing nothing.

In fact, French has a message for those who have designs on the reserve and want to add it to the general fund. It’s against the law.

Turns out he’s right. The Nevada Revised Statutes 584.053 spills the milk, so to speak, on the governor’s grab of what’s officially known as the Dairy Commission Fund: "Except as otherwise required in NRS 584.670, all money received by the Commission pursuant to the provisions of this chapter must be paid into the Fund and must be expended solely for the administration and enforcement of the provisions of this chapter."

"It’s not legal the way it stands right now," says French, who has been with the commission 21 years and adds proudly, "We operate extremely conservative."

Does the Legislature have time and legal standing to change the statute during a special session?

No one seems to know just yet — just as French doesn’t yet know exactly how much the governor wants to skim from the Dairy Commission’s reserve fund. The special session is set to begin at 9 a.m. on Feb. 23.

I’m focusing on a single element of the gubernatorial proclamation for a reason. The Dairy Commission isn’t alone in practicing fiscal responsibility. For his part, French has already trimmed his staff from 17 to 11.

Meanwhile, there’s no meaningful discussion of improving the tax structure to prevent treacherous revenue roller coaster rides in the future.

When you vow to carve government to the exclusion of considering taxing entities that can easily afford it, you’re destined to trample the law.

At this point, picking on the Dairy Commission is a sign of udder failure.

John L. Smith’s column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295. He also blogs at lvrj.com/blogs/smith.