Media pundits still confused

In "Ostriches are isolated" Jon Ralston attacked the Nevada Policy Research Institute for its criticism of how the government and the media both have handled the discussions and coverage of the state budget-cutting issue.

NPRI simply wondered why, given a more than $15 billion biennial budget, so much worrying concerns revenue for the General Fund, when it, according to the Governor's Executive Budget, makes up only 37.5 percent of the total state budget? We also had the temerity to ask how the alleged "34 percent cut" was calculated – a critical question to which we never received an answer.

We have all heard from the media and the government that Nevada is facing a $1.5 billion shortfall, but policymakers have had a transparently difficult time explaining this shortfall. The media also – Jon Ralston included – doesn't seem able to do any better.

From what we can ascertain, about $1 billion of the shortfall comes from an actual revenue shortfall. In 2007, the legislature voted to appropriate $6.8 billion from the General Fund. By December 2008, the Economic Forum projected that the General Fund would take in only $5.8 billion. The difference in revenue is just $1 billion.

The remainder of the shortfall appears to be formula driven – but policy makers and the media appear reluctant to acknowledge this. We contacted state budget maven Andrew Clinger in early December, but, almost three weeks later, he has not yet responded to explain how he arrived at the 34 percent figure. Nor has he removed our suspicions regarding the budget shortfall.

Apparently, what we're dealing with is an effort to conflate the subject of revenue with the subject of spending in service to various still-unmodified formulas. Thus the bulk of the cuts simply come from the fact that the government tried to increase spending more than 15 percent.

From the available evidence the 34 percent number appears imaginary, whether this biennium or the next. The legislature cannot appropriate more money than exists. The Economic Forum currently projects $5.65 billion for the next biennium, meaning the legislature cannot appropriate more than about $5.65 billion – a shortfall of $0.

The main source of confusion for Nevada's citizens and the media has been the fact that policymakers have been talking about a revenue shortfall, not stringent inflexible mathematical formulas that dictate that we spend even more than we can possibly appropriate. Formula spending means the legislature has given up control over appropriations to a very strict mathematical formula – a formula put in place in fatter times.

To get close to that mysterious 34 percent figure in the 2009-2011 biennium, Nevada's legislature must appropriate more than $8.5 billion from the general fund, despite knowing that the current Economic Forum projection is down to $5.65 billion. That is a 25 percent increase from the legislature's 2007 appropriations – which goes to show, again, that Nevada's shortfall is the result of lawmakers growing the government faster than Nevadans can grow their own incomes.

Mr. Ralston, like Barbara Buckley, wants to use the general fund revenue (which by the way has increased over 61 percent in the last decade), to divert attention from the total budget – at $18.3 billion in 2007, according to the Governor's executive budget.

Ironically our original point stands: policymakers are taking advantage of a confused media. Hopefully someone in the media will have the courage to ask serious questions about the budget – we don't expect any tough questions from Jon Ralston though.

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