Report: Nevada’s financial position ‘precarious’
Past policymakers said to have evaded balanced-budget law
- Wednesday, January 19, 2011
The Chicago-based Institute for Truth in Accounting today called the financial position of the State of Nevada "precarious" and said past Silver State governors and legislatures had evaded the state's balanced-budget law.
"If governors and legislatures had truly balanced the state's budget, no taxpayer's financial burden would exist," said Sheila Weinberg, founder and CEO of the Institute. "A state budget is not balanced if past costs, including those for employees' retirement benefits, are pushed into the future."
Nevada's financial position is precarious, said Weinberg, because it does not have the funds available to pay more than $4.3 billion of the state's commitments as they come due. Each taxpayer's share of the state's current financial burden is $5,000, she said.
The Institute for Truth in Accounting (IFTA) characterizes itself as "dedicated to promoting honest, accurate and transparent accounting at all levels of government and business.
"As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data — and, in turn, providing a foundation for more informed public policy."
The new IFTA report released today, the Nevada "Financial State of the State," resulted from "an intensive review of the State's 2010 audited financial report, available on the Nevada State Controller's website.
While Nevada reported total assets of $13.8 billion, the Institute's review of the state's 2010 financial report asserted that there are almost $1.9 billion of off-balance sheet retirement liabilities. More than $9.1 billion of the state's assets cannot be easily converted to cash to pay state bills of $8.9 billion as they come due, writes Weinberg. These assets consist of capital assets, including infrastructure, buildings and land, and assets the use of which is restricted by law or contract. The state does not have the funds needed to pay for more than $4.3 billion of state obligations, she said.
Most of the obligations relate to state employees' and teachers' pension and retirement health care benefits. Years of over-promising retirement benefits, while shortchanging funding, have resulted in the state's retirement systems being underfunded by $1.9 billion, says the report, adding that the underfunding has recently been exacerbated by drastic declines in the market value of retirement systems' assets. As of June 30, 2010, the state had set aside only 4 cents to pay for each dollar of benefits promised. As of that date, only $78 million was deposited into the retirement systems, even though the actuaries calculated that a minimum of $2 billion should have already been contributed.
The Institute for Truth in Accounting reviews state financial reports from virtually every state. To learn more, visit its website at http://www.truthinaccounting.org/.
Steven Miller is vice president for policy at the Nevada Policy Research Institute. For more visit http://npri.org/.