Rainy day fund addition opposed

CARSON CITY -- A lawmaker suggested Monday that additional money being proposed for the state's rainy day fund should instead be used to at least partially offset $112 million in spending reductions that Gov. Jim Gibbons has recommended for a variety of proposed new programs.

Sen. Bob Coffin, D-Las Vegas, said the rainy day fund, which would grow to more than $300 million with the addition of $36 million in new money as proposed by Gibbons in his budget, is intended to be used in fiscal emergencies.

Coffin said that since it appears Nevada is already having a rainy day, "Wouldn't it be prudent to consider leveling this off by using the rainy day fund? Why would we want to starve some of those other programs?"

State Budget Director Andrew Clinger said one reason for the proposed addition to the rainy day fund is because of the potential loss of revenue if Southern California Edison wins its tax refund. The Nevada Tax Commission in 2005 approved a sales tax refund to the utility for the operation of its Mohave Generating Station near Laughlin, but Clark County is seeking judicial review of the refund.

The state's share, if the utility wins the refund, is about $36 million, but interest continues to grow on that amount, Clinger said.

The budget discussion came at a meeting of the Senate Finance Committee.

Gibbons announced last week the need to reduce new spending by $112 million because of lower than anticipated tax increases for the coming two years.

Clinger said state agencies, with a few exclusions, have been asked to reduce their new program requests by 63 percent.

What has been excluded from any reduction is public education, child welfare and a $170 million one-shot appropriation for an Interstate 15 widening project in Las Vegas, he said. A bill providing $17.8 million for mental heath care is also exempt, Clinger said.

Included in the requested reductions are new programs proposed for the courts, higher education, the Legislature, constitutional officers as well as state agencies.

Clinger said some of the governor's initiatives are being reviewed for reductions as well.

Senate Finance Committee Chairman Bill Raggio, R-Reno, said that while the adjustments are painful, it is easier to cut proposed spending now, before the two-year $6.7 billion budget is approved, than after the fact.

Nearly $700 million of mostly one-time funding requests are contained in separate bills that are not included in the budget and that now will likely not receive any support, Raggio said.

"It's going to be a lot of agony and a lot of expectations that aren't going to be met," he said.

Sen. Bob Beers, R-Las Vegas, noted that even with the reductions, state tax revenues will grow by 5.2 percent in the first year of the budget and 6.8 percent in the second year.

"Leading me to contend we don't have a revenue problem, we have a spending problem," he said.