CARSON CITY — Gov. Brian Sandoval has a plan to substantially reduce Nevada’s looming shortfall in its current budget by sweeping agency reserve accounts and trimming other expenditures, administration officials said Tuesday.
Julia Teska, state budget director, told a joint meeting of the Senate Finance and Assembly Ways and Means committees the transfers would boost Nevada’s ending fund balance for the fiscal year that ends June 30 to $154.5 million — far greater than the $8 million projected just a few weeks ago.
The shortfall, initially expected at $162 million, will be reduced to an anticipated $15.2 million with the proposed actions, Teska said.
The state late last year revised revenues downward by $87 million because of weakness in mining and gaming revenues. At the same time, it revised spending upward by $81 million mostly because of unexpectedly strong growth in school enrollments.
Nevada is statutorily required to have a minimum 5 percent of the general fund budget on hand at the end of a fiscal year to provide a reserve for emergencies. Teska said the new projected ending balance comes close at 4.5 percent. Having a big shortfall would require lawmakers to backfill this year’s budget with revenue that otherwise would go toward funding the next two years.
News of the initial $162 million shortfall caught the attention of the credit rating firm Moody’s, which declared the development — one of many factors considered when determining a state’s credit rating — as a negative. Moody’s lists Nevada’s current bond rating as Aa2.
Teska said administration officials were able to cut the deficit by taking $28 million from the state’s rainy day fund and “sweeping” about $80 million from agency reserves.
Suspending two state employee group insurance payments adds another $20 million; $3.6 million comes from unclaimed tax overpayments; and $6.5 million from salary adjustment funds within the Nevada System of Higher Education.
Mike Willden, Sandoval’s chief of staff, said bills will be introduced early in the legislative session to make the transfers to the general fund.
The 2015 session begins Feb. 2.
Contact Sandra Chereb at firstname.lastname@example.org or 775-687-3901. Find her on Twitter: @SandraChereb
See all of our coverage: 2015 Nevada Legislature.