EDITORIAL: Gov. Steve Sisolak declares emergency as budget in tatters

Gov. Steve Sisolak took the inevitable step on Monday of declaring a “fiscal emergency,” which moves Nevada closer to tapping its $400 million budget reserve in order to help cover the massive costs of the coronavirus economic shutdowns. Lawmakers on the Interim Finance Committee are expected to issue a similar declaration on Wednesday.

Gaming and sales taxes make up almost half of the state’s general fund revenue. With casinos shuttered since mid-March and so-called nonessential businesses only slowly beginning to reopen, Nevada’s biennial budget is in tatters. Gov. Sisolak noted that his analysts now project a shortfall as high as $911 million for the fiscal year ending in June. The deficits will bleed into fiscal 2021 and potentially beyond.

“With the closure of Nevada businesses, including the gaming industry, that was necessary to protect the health of Nevadans,” the governor said in a statement, “the drop in revenue is not unexpected and it is significant.”

Early last month as the lockdown began to ravage the economy, Gov. Sisolak told state agencies to prepare for budget cuts totaling $687 million over the next two fiscal years.

With tax increases a difficult sell during what might evolve into a full-blown depression, the new normal for state lawmakers — throughout the country — should be forced fiscal restraint. It’s worth noting that the Legislature last year, with the economy roaring, approved generous near double-digit spending hikes that well exceeded population growth and inflation combined. Gov. Sisolak even signed a measure giving state workers the right to collectively bargain, which will only further stress future spending blueprints.

The coronavirus crisis is yet another reminder of the value of cautious and prudent budgeting. The urge to “spend, spend, spend” during the good times builds up baseline budgets, making it more difficult to pull back when the party stops. House Democrats in Washington are now pushing for a massive bailout of the states, and Gov. Sisolak and Democratic legislative leaders have made it clear that federal help would be welcomed. But let’s not kid ourselves. None of this money is “free.” As Beltway politicians double the soaring national debt in response to the virus lockdowns, they only further burden households throughout the country, including in Nevada.

Any aid package for the states must include conditions to ensure the money truly shores up essential services and isn’t simply enabling bad habits. In the meantime, as state Sen. Ben Kieckhefer, R-Reno, put it this week, now is the time for Nevada lawmakers “to hit the brakes pretty hard on the spending.”