Government Spending

The magical language of special session

Geoffrey Lawrence

When Nevada lawmakers meet for special sessions to reconcile differences between revenues and spending, they develop an entirely new language.

It's a kind of Orwellian double-speak. In this strange tongue, what most people know as "revenue enhancements" somehow get relabeled as "cuts."

In Nevada's Magical Land of Special Session, lawmakers can have it both ways — increasing tax revenues or borrowing against the future to prop up spending, while simultaneously complaining that those measures represent "cuts" to services.

An example: During the 2007-09 budget cycle, lawmakers met for two special sessions to reconcile a cumulative $615 million difference between budgeted expenditures and actual revenues. The lawmakers then claimed that they had reduced General Fund spending from the original $6.812 billion approved in the 2007 regular session to a new total of $6.197 billion.

That message, however, seems to have never made it over to the executive branch, where state agencies were spending the money.

Legislators had met most of that $615 million difference by transferring money from the state's stabilization fund and other minor accounts into the General Fund, as well as borrowing money from the local government investment pool to simply prop up continued spending. However, as a public-records request to the state budget office has revealed, General Fund expenditures for the 2007-09 budget cycle proceeded to actually exceed the budgeted amount by $46 million — amounting to $6.859 billion in actual spending!

Then, during the 2009 regular legislative session, lawmakers turned around and used these non-existent "cuts" — which had allowed even more state spending — as leverage to gin up support for their 19 percent overall increase in the state tax burden. This allowed the legislature's majority faction to keep inflation-adjusted, per-capita spending roughly the same, as, all the while, its leaders wailed about not meeting their spending target of $7.9 billion.

To be sure, for the 2009-11 cycle, budgeted state spending increased by $134 million dollars. Lawmakers, however, had targeted an increase of $1.1 billion.

Heaven forbid that lawmakers pare back inflation-adjusted spending to the per-taxpayer levels in place just six years ago — before legislators launched 2005's surplus-fueled spending binge. That would instantly change the current shortfall into a surplus, since total spending for the biennium would amount to only $5.3 billion.

Sadly, this option hasn't even been considered.

Governor Gibbons has proposed $888 million in adjustments to make up the current shortfall — only $348 million of which are actually spending reductions. Of course, in the Magical Language of Special Session Land, the remaining $540 million will also inevitably be labeled "cuts." What that amount actually constitutes, however, are the tax-burden increases and the accounting gimmicks Carson City uses to keep the spending going.

In fact, in lieu of the current 31 percent increase in real, per-capita spending levels over those of just six years ago, Gibbons is proposing levels that are a "mere" 23 percent higher.

Cuts, indeed!

Yet, even the governor's plan to continue growing government does not grow it quickly enough for lawmakers — many of whom viewed the 31-percent increase itself, during the 2009 regular session, as unsatisfactory.

Senate Majority Leader Steven Horsford says that Silver State businesses "must be part of the solution" by contributing more in tax dollars in order to maintain the high rate of growth in government spending over the past several years. Otherwise, he fears the state will be "looking at thousands of layoffs." That would make sense, considering state data showing that public-sector employment has continued to grow during this recession while even lower-paying private-sector jobs have disappeared en masse.

In truth, the entire special session is a farce — a charade that prudent budgeting could have avoided entirely. It never should have come to this. The fact that it has only demonstrates how irresponsible it was to try to grow government spending at such unsustainable rates.

In 2005, recklessly indulging their spending desires, lawmakers and then-governor Guinn wandered way over into fiscal fantasyland. The current Carson City crew, however, is eager to live there permanently.

Geoffrey Lawrence is a fiscal policy analyst at the Nevada Policy Research Institute.

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.