Sandoval seeks Reid’s help in saving state $320 million

CARSON CITY -- Gov.-elect Brian Sandoval sought U.S. Senate Majority Leader Harry Reid's help this week in an effort to save $320 million in potential state costs, one of his key transition team members said Wednesday.

Republican Sandoval visited Democrat Reid in Washington, D.C., on Tuesday because he is concerned that the state will owe the federal government $105 million in interest charges over the next two years on loans given Nevada to pay state unemployment benefits, according to Dale Erquiaga, his deputy transition director.

Nevada has borrowed more than $500 million in the past year from the U.S. Department of Labor and its borrowing is expected to reach $825 million by the end of 2011. Interest charges are due Sept. 30.

With Reid's help, these interest charges could be postponed or forgiven, he said.

Sandoval also wanted to talk with Reid about whether the federal government can pick up $215 million of the state's costs for administering Medicaid, the free health care program for the poor, blind, disabled and some of the elderly.

Erquiaga noted that Nevada's per capita income has been dropping since the recession started. The reimbursement rate is calculated on per capita income earnings in the state over a three-year period. Nevada's per capita income last year was $37,689, down from $40,389 in 2007, the steepest decline in the nation.

Also, under the current formula, the federal government pays 64 percent of Medicaid costs, but that rate is scheduled to fall to about 55 percent.

"He (Reid) is the senior senator and the majority leader," Erquiaga said. "We want to work with him. The election is behind us."

But Erquiaga acknowledged he had not spoken to Sandoval since before the meeting with Reid and did not know "the tenor" of the meeting. Sandoval defeated Reid's son Rory in the Nov. 2 election for governor.

He said the governor-elect would not comment on the meeting. Sandoval does not intend to talk directly to the media about his budget until after Dec. 1 when the Economic Forum, a group of five business leaders, will announce how much the state can spend, he said.

Reid spokesman Tom Brede said Wednesday that the senator hopes the help Sandoval seeks can be secured.

"Senator Reid understands the importance of Medicaid funds in Nevada which is why he fought to secure the largest percent increase of any state in the stimulus bill (which is expiring)," Brede said. "He supports extending that aid to our state in the next Congress but needs his Republican colleagues to put people before politics and join him to get it passed."

The Medicaid program already costs Nevada nearly $500 million a year, although most other costs are paid by the federal government.

State costs are expected to increase by $100 million a year as more people qualify for Medicaid. Now more than 276,000 residents receive health care through Medicaid and that number is expected to reach 311,000 by June 30, 2013.

State Budget Director Andrew Clinger already has estimated that about $5.4 billion in revenue will be available for the two-year budget period that begins July 1.

That would be a 16 percent, or $1 billion, drop from current spending, although some legislators have estimated the shortfall is $3 billion.

In an interview right after the election, Sandoval said he did not agree that state spending must be cut by 16 percent. He refused to give a percentage of cuts facing state agencies, while reiterating he will not increases taxes or fees.

But the governor-elect has said repeatedly that he intends to reduce state spending to 2007 levels.

Michael Willden, director of the state Health and Human Services Department, said he would be forced to make massive cuts if the federal government does not pick up the $215 million in Medicaid costs discussed during the Reid-Sandoval meeting.

"Our revenue is shrinking, the federal reimbursement is dropping and we have a rising caseload," he said.

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