Governor amends budget proposal

Geoffrey Lawrence

Yesterday afternoon, Department of Administration Director Andrew Clinger, on behalf of the governor, presented an amended budget proposal for the upcoming biennium.

The amended budget purports to avert the need for tax increases. It also incorporates at least one recommendation from NPRI’s Freedom Budget. However, there are several problematic elements to the proposal that make it an inferior option to the Freedom Budget.

The proposal would involve very few substantive changes and would instead use a series of accounting gimmicks in combination with federal stimulus dollars to arrive at a total figure of about $6.1 billion – $1 billion more than the Freedom Budget.

From all reports, the only substantive reduction in spending would be an elimination of the full-day kindergarten program of dubious merit that the legislature created when coffers were flush in 2005. The Freedom Budget also recommended elimination of this program for a savings of $52 million.

The governor’s amended budget would draw $357 million in federal stimulus funds for the state’s general fund. It would also attempt to sell the state’s rights to many years worth of tobacco settlement funds in order to secure a lump sum of $340 million now. This will, of course, put a strain on the Millennium Scholarship program which is funded mostly through tobacco settlement proceeds. One danger is that this large obligation that was originally sold on the idea that taxpayers would not directly bear its costs may eventually wind up in the general fund if the plan is adopted.

The amended budget would further secure a $160 million line of credit in FY10. A similar move was made by the recent 25th Special Session. Both are likely in violation of the state’s constitutional provision that requires the state to operate on a balanced budget.

The new proposals are widely considered to be dead on arrival. This is just as well considering that there are few substantive reforms that would require government to reign in spending and live within its means. Instead the amended budget includes a series of dangerous and probably illegal fund credit lines and fund transfers.

The governor is failing to demonstrate an attitude of fiscal discipline. His office is essentially claiming the need for expansive government but whining about not wanting to pay for it. Unfortunately, he can’t have his cake and eat it too.

If the governor is truly committed to not raising the tax burden on suffering Nevadans, his office has to be willing to set priorities and determine which government programs are expendable. He cannot simply propose a budget that exceeds projected revenues and then say he’s not willing to pay for his own budget.

Perhaps the governor’s office should have spent more time applying the principles contained in the Freedom Budget and eliminating areas of government waste or inefficiency.

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.