Nevada’s budget numbers don’t add up

To the editor:

The editorial, "Wrong recipe: Despite report, higher taxes not the answer" (Friday Review-Journal), inaccurately characterizes the findings of the Pew Center on the States report titled "Beyond California: States in Fiscal Peril." Our report takes no position on how Nevada and other states should address their fiscal challenges -- whether they should cut spending, increase taxes or both to close their budget gaps. Rather, using publicly available, widely accepted data, we examined the fiscal conditions of states and the ability of each one to pay for the priorities it has set for itself.

As our report makes clear, Nevada, like California and the eight other states we profiled, faces enormous economic challenges. Many states will need another three to five years to recover to pre-recession peaks, according to most experts.

Nevada had an unprecedented $3 billion shortfall in the biennial budget for fiscal year 2010 and 2011. The state's revenues for fiscal year 2009 declined about 16 percent from their peak in fiscal year 2006, according to an analysis of data from the U.S. Census Bureau. The Legislature cut spending, increased taxes and used federal stimulus funds to balance its current budget.

But even tougher challenges await. A projected $3 billion gap in the next biennial budget means Nevada will have to take additional steps to align its revenues and expenditures.

Finally, our report found that in most of the 10 states we examined -- including Nevada -- lawmakers' latitude to respond to the fiscal crisis by raising taxes or cutting spending is restricted by their states' constitutions, ballot measures passed by voters, or other statutory or legal impediments to change.

Our point is that during a severe economic downturn, they tend to constrain the already-limited choices available to both policymakers and the public.

Pew's focus on states' fiscal health is consistent with our long-standing commitment to public policies such as quality pre-kindergarten that provide taxpayers with a proven return on investment and increase states' economic competitiveness.

These issues are matters of national importance. Together, the 10 states we studied make up one-third of our country's economic output and population. Whatever actions the lawmakers in each of these states take -- cutting budgets, raising taxes, prioritizing proven investments or otherwise -- will affect how quickly and effectively America recovers.

Susan K. Urahn

WASHINGTON, D.C.

THE WRITER IS MANAGING DIRECTOR OF THE PEW CENTER ON THE STATES.