Sandoval: Reset the baseline to 2007 levels

Victor Joecks

Aside from both candidates seeming to agree that colleges and universities should have increased autonomy, starting with keeping their own tuition, the big news of the night was about Sandoval’s budget plan.

Sandoval’s plan is to roll back the spending baseline to 2007 levels.

The gist of Sandoval’s plan is to roll back general fund spending to about $5.2 billion during the upcoming biennium, less than the $5.8 billion spent in the 2005-07 budget. He justified it by saying the population in Nevada has fallen 2.6 percent since 2007 and demand for some state services has declined or remained flat, yet spending has increased 38 percent.

It only got better, because Sandoval also explained how baseline budgeting works – take the previous year’s expenditures and increase. This has led to the unsustainable spending that is causing the problems Nevada is facing right now. For example, this is why Nevada’s projected budget deficit contains a 28 percent spending increase (or check out the video version).

Correcting the baseline budgeting process (or, ideally, replacing it with a Budgeting for Outcomes approach) is a central element in fixing Nevada’s budget problems.

Sandoval’s campaign issued a press release after the debate, which provided a few more details.

“Since 2007, Nevada’s population has declined by almost three percent while state spending has increased by 38 percent,” Sandoval said. “It is time for a fundamental correction in how we build the state budget. For as long as anyone can remember, we have created the state budget by using the prior two years as the baseline and simply increasing spending. For many years this method worked; growth was constant and there was always more money available. The recent economic downturn, however, has changed our state revenue projections to such a degree that we must completely rethink how we budget going forward.”

Describing his plan for bringing state spending in line with available revenues, Sandoval said that most Nevadans don’t know the Legislature has operated under the false assumption that increased population and increased caseloads will make future spending increases necessary. The facts do not bear that out:

• Since 2007, Nevada’s population has actually declined by 2.59 percent. More than 70,000 residents have left the state.

• Enrollment in our schools has increased by only 3% since 2007 and is expected to be flat in the coming year.

• Caseloads in prisons, mental health, child welfare, and parole and probation are either flat or declining; only Medicaid continues to post dramatic caseload increases.

“Population is down and caseloads in almost every category are flat, yet we continue to spend more each year and some are calling for increased taxes in the face of the worst economic recession of our time,” Sandoval said. “Medicaid caseloads have increased significantly, and we must meet that need. However, Nevada’s current level of institutional spending is unsustainable, and needs to end. We must change the way we budget by beginning with the amount of money we have, not with the money we spent two years ago.”

Sandoval said the latest revenue projections indicate that the state will have $5.2 billion to spend in the coming biennium. In 2007, the state spent $5.8 billion but spending has since grown to $8 billion.

As Governor, Sandoval will:

• Begin the budget process by resetting our baseline to 2007 and rolling back spending to 2007 levels.

• Require state agencies to budget against available revenue, existing caseloads, and the realities of a declining population.

• Fully fund Medicaid and ensure that critical social service programs are not used as “human shields” to protect a growing bureaucracy.

• Continue state employee furloughs and related salary reductions.

• Pursue agency consolidations, privatization, and efficiencies such as those proposed by the SAGE Commission wherever possible, once he has selected his cabinet and met with all agency heads.

While I don’t agree that the baseline budgeting process “worked” during the years of economic growth, overall Sandoval’s outline would be a good way to start correcting the overspending of the past few years that has led to Nevada’s current budget situation.

Also, here are NPRI’s thoughts on Rory Reid’s budget plan: Reid’s budget plan: positive, but flawed.

Update: Changed the intro line to reflect that Sandoval and Reid had four debates not three.