Guinn hopes to restore 'rainy day' fund in budget plan

Returning the budget to good financial health, setting aside money for another "rainy day" and directing any extra funds to struggling public schools are Kenny Guinn's objectives as he prepares his final spending plan as governor.

Guinn, who is in the last half of his second and final term as governor, said this week that he will not support any tax increases in the upcoming legislative session, which convenes in January.

Although he cautioned the state will not have much money for new programs despite a record $833 million tax increase approved by the Legislature last year.

"People are going to say, 'But you got $833 million last year,"' he said. "That wasn't to do new and great things. It was really just to take care of what we couldn't do that we had already been doing."

Guinn will begin budget discussions on Monday. His spending plan will be unveiled in late January in his "state of the state" speech.

Guinn said a top priority will be putting money back into the state's "rainy day" fund, which had $136 million before an economic slowdown forced officials to tap it to maintain programs and services. It now has $1 million.

Assembly Speaker Richard Perkins, D-Henderson, said replenishing the "rainy day" fund should be a priority, but more information will be needed before the Legislature can form the rest of its budget decisions.

"It's difficult to place priorities right now," Perkins said. "We don't want to create expectations."

Guinn said another priority will be to use state tax revenue to bridge a $200 million gap in the budget.

The shortfall was created by the phasing out of the estate tax and loss of federal funds, Guinn said. Each of those will cost about $100 million and must be replaced with new, ongoing state tax revenue, Guinn said.

Accomplishing those two tasks will put the 2005-2007 state budget on solid financial footing, Guinn said.

Another key will be funding struggling public schools under the No Child Left Behind Act. Last school year, 225 schools statewide were placed on either the watch list or the needs-improvement list for failing to measure up academically. That represents 40 percent of Nevada's public schools.

"I believe this state, the governor and the legislative body, has an obligation to do everything we can to take some action regarding the schools on the failure list," Guinn said. "But it can't just be money going in. There has to be some strong accountability."

The exact amount of revenue available for the budget has not yet been determined. The Economic Forum, a panel of government and private business officials, meets Dec. 1 to set the preliminary revenue projection for the next two years.

Early estimates suggest there will be about $5.65 billion in general fund tax revenue for the next two years, up from $4.72 billion projected for the current budget, which includes the new taxes approved by the Legislature. It would be an increase of almost 20 percent.

Schools are asking for nearly $2 billion in general fund support over the next two years. The request includes a 3 percent per year cost-of-living raise for teachers and other school employees that would cost $172 million.

The University and Community College System of Nevada is asking the state for about $1.1 billion just for existing programs plus student population growth.

Spending on education typically consumes more than 50 percent of the state budget. It accounts for 52.8 percent in the current budget.

"There is not going to be any extra money to speak of," said state Budget Director Perry Comeaux. "But it doesn't look too bad. It could be a lot worse."

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Information from: Las Vegas Review-Journal, http://www.lvrj.com