Senator says road fund shift will cost Nevada construction jobs

CARSON CITY - State Sen. Ruben Kihuen complained Tuesday that the state will lose thousands of road construction jobs because of Gov. Brian Sandoval's decision to raid the highway fund to balance his proposed $6.55 billion state government budget.

"That $126 million was intended for road construction," said Kihuen, D-Las Vegas, during a joint meeting of the Senate Committee on Revenue and the Assembly Taxation Committee.

"It would create jobs. Where do we replace it (the money)?" he asked.

State Budget Director Jeff Mohlenkamp denied thousands of jobs will be lost but acknowledged taking the highway funds to balance the budget means there will be less spending on road construction.

He noted that the Nevada Department of Transportation also is receiving less in federal construction dollars.

'With fewer (construction) projects, there will be fewer jobs," Mohlenkamp said . "But you are assuming the money is not going to other good uses."

A Federal Highway Administration study in 2007 found that for each $100 million spent on a road construction project, 3,006 jobs of all types, not just construction jobs, are created.

Scott Magruder, a Transportation Department spokesman, said his agency uses the federal study estimates in determining the effect of state projects.

"Jobs definitely will be lost," Magruder said about the governor's plan to divert road funds to other parts of the state budget.

"In the short term, it will not reduce our ability to maintain roads," said Mohlenkamp about moving the funds away from the Department of Transportation. "They can still fund major projects."

Mohlenkamp said the administration needs more money to cover the projected growth in the Medicaid caseload and to provide $135 million in additional funds for public education.

The two tax committees are reviewing all state tax sources as part of an effort to bring about tax reform.

While Sandoval is on record as opposing all new taxes, other than continuing $649 million in sales and business taxes that would expire after June 30, Mohlenkamp said the governor does favor increasing fees charged by the state energy and water engineer's offices.

The increases are designed only to cover the costs of services that the offices provide to people, he said.

Fee increases, however, are treated under the state constitution the same as tax increases and require the support of two-thirds of the both houses of the Legislature before they can go into effect.

The $126 million the governor's office wants to take from the highway fund is revenue raised from the governmental services tax - money motorists pay when they register their cars and trucks with the Department of Motor Vehicles.

After Tuesday's meeting, Kihuen reiterated his concern that the governor's plan will cost Nevada potentially thousands of jobs.

"Over the last five years about 100,000 construction workers lost jobs in Nevada," he said. "A lot of these folks would be employed again if these funds were spent where they were intended. It just goes to show you how weak our economy is. We are having to move money from Peter to pay Paul."

While Kihuen now wants funds raised for road construction to be used for that purpose, records show that in 2011 he voted for a bill that diverted about
$20 million a year in DMV-raised money to the state general fund.

He gave no indication where the committee can find another $126 million, other than saying that is something the Legislature must determine over the next few months.

Sen. Kelvin Atkinson, D-North Las Vegas, announced before the session that he was drawing up a bill to use the government services funds as backing for a $600 million bond to finance all types of construction projects in Nevada, including highway projects.

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