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$4 billion in local revenue might play in state budget game
Money collected by entities may help state cover deficit
January 30, 2010 - CARSON
CITY - As the governor and lawmakers look for ways to fill a $900 million hole
in the state budget, giant pots of money sitting in bank accounts of Southern
Nevada governments and agencies might prove too tempting to overlook.
Clark County, the Southern Nevada Water Authority, Clark County School District,
Regional Transportation Commission and Southern Nevada’s cities are holding a
total of $4 billion collected during the boom to construct roads, schools and
other public works projects.
With growth stalled, and the need for new schools and roads diminished, some
officials are quietly pointing to the money as a way to mitigate steep state
budget cuts, which could include teacher layoffs and cuts in education, social
services and public safety.
Southern Nevada capital project fund balances stood at $4 billion as of June 30,
according to the financial firm Applied Analysis. Northern Nevada government
capital reserves would add about $300 million to the total.
During the boom years, Nevada’s tax structure evolved to keep pace with growth
by funding flood control projects, streets, parks and water projects. With
growth on hiatus, there appears to be less need for such spending.
Meanwhile, governments statewide are struggling to fund their operations with
falling tax revenue.
Not all of the $4 billion could be tapped for operating expenses. Much of it has
been committed to bond payments or was set aside by voters for specific purposes
— making it difficult, if not impossible, to alter.
The Greater Las Vegas Chamber of Commerce, which has led the charge to cut
public employee pay and benefits, is preparing a study on the capital accounts.
Steve Hill, past chamber chairman, said there are two questions the business
group wants to answer:
• Do the funds have more money than they need to pay off bonds and maintain bond
ratings?
• Now that growth has slowed, do plans for schools, parks, roads and buildings
need to be revised?
Brian Sandoval, a Republican candidate for governor, broached the idea of
tapping capital funds this month.
He estimated the Clark County School District could use about $100 million of
its $1.1 billion school construction and repair fund on operating costs, freeing
an equal amount for the state to reduce its general fund shortfall.
“These are all tough decisions,” Sandoval said. “The reality of a $900 million
deficit is there are no easy answers left. I think taxpayers would prefer this
plan to raising taxes, mass teacher layoffs, deficit spending or cuts that may
affect the classroom.”
Regardless of the dire need, any proposal to bail out the state with Southern
Nevada’s tax dollars would certainly meet resistance.
One danger of taking money from capital funds is that it could lead to fewer
public works projects at time when unemployment in the construction industry is
at a historic high.
“I would want to be very careful looking at capital funds, because any time you
do, there’s the potential to eliminate jobs in the construction industry, where
we already have such a crisis,” Assemblywoman Debbie Smith, D-Reno, said.
Jeremy Aguero, principal of Applied Analysis, is preparing a report on the
capital funds on behalf of the Associated General Contractors. The contractors,
who will present the report to the Legislature’s Interim Finance Committee on
Wednesday, strongly oppose taking the money.
Terri Janison, president of the Clark County School Board, said it’s not clear
whether Sandoval’s plan is legal. She said she has not received an answer from
the district’s legal staff.
But even if it could be done legally, it’s a bad idea on principle, she said.
The district may not be growing as it once was and may not immediately need new
schools, but the money has also been allocated to rehab aging buildings. “We
have buildings that are 30, 40, 50 years old that are literally falling apart,”
Janison said.
Asked whether it would be preferable to use the capital funds to avoid teacher
layoffs or pay cuts, she said: “That’s the unfortunate situation people have put
us in. Those are terribly, terribly tough choices. One is not better than the
other.” |
