In party-line vote, Nevada lawmakers transfer $401M ‘Rainy Day’ fund to offset economic shutdown
CARSON CITY, Nev. — Nevada’s Legislative Interim Finance Committee voted Monday to move the entire Rainy Day Fund into the General Fund where it can be used to offset revenues lost to the Silver State’s coronavirus-related economic shutdown.
The vote was along party lines — 13 Democrats for, 7 Republicans against — with Republican members arguing they would like to see at least some of the proposed cuts the governor plans to make before taking the entire $401.18 million that will cover most, but not all, projected losses in gaming and sales tax revenues.
State Finance Director Susan Brown told lawmakers Gov. Sisolak’s administration is working to identify and “capture” savings from not only ongoing expenses, but one-shot projects, capital improvements and other things that can be delayed.
She did not have details on what cuts will finally be ordered and how much they will generate.
But critics pointed out only six weeks remain in the fiscal year, meaning the amount the state can save this fiscal year might be small.
They also pointed out the shortfall in fiscal 2021 could be much larger, up to $1 billion.
“I understand we’re going to have to do it, but before we do that, I would like to see the cuts,” said Assemblyman Jim Wheeler, R-Gardnerville.
He was joined by Senate Minority Leader James Settelmeyer, R-Minden, who said the administration announced no plan to reduce spending in March or April and, “in May, still no plan to reduce costs.”
IFC Chairman Assemblywoman Maggie Carlton, D-Las Vegas, said the state needs the Rainy Day Fund transferred to the General Fund so it can pay the bills the state is obligated to pay during the rest of this fiscal year.
She was joined by Assembly Majority Leader Teresa Benitez Thompson, D-Reno, who said as far as she understands, “if we don’t move this money over, we won’t be able to make those payments for education, NSHE and Medicaid.”
That includes not only the reduced revenues the state receives but the substantial losses to the Local School Support Tax and other resources that go directly to the state’s 17 school districts. The state is required by law to make up any shortfalls in those revenues and that money also comes from sales taxes.
Brown said the school district normal payments come to about $115 million a month.
Sens. Ben Kieckhefer of Reno and Pete Goicoechea of Eureka, both Republicans, said they can support moving a chunk of the $401.2 million but not all of it until they see some of the proposed reductions.
“And I haven’t heard yet that we actually have a cash flow problem that needs this transfer,” said Kieckhefer.
He said with the $836 million from the CARES Act in the treasury, “I assume our treasury is fairly flush at this point.”
“The argument that we need to pay our bills doesn’t seem to carry water when we have cash in the treasury,” he said.
Brown told the panel the state can use the COVID-19 money to cover cashflow but not to balance the state budget so anything taken from that pot would have to be paid back.
Goicoechea said he could support moving half the Rainy Day Fund but that, if they need to move more, they have multiple meetings before the end of June. He said he feared they were “hanging all of this” on the hope that another stimulus package will pass Congress., but might not.
Assembly Minority Leader Robin Titus, R-Wellington, said one of her concerns was the impact draining the state’s reserves would have on Nevada’s bond rating, that it might end up costing the state more money in the end.
Assembly Speaker Jason Frierson, D-Las Vegas, said the shortfall just this fiscal year will be some $200 million over the $400 million in the Rainy Day fund and that it makes no sense to withhold that money at this point.
Carlton argued that to, “put the decision off would be irresponsible at this time.”
In addition, the committee approved acceptance of $117.2 million in School Emergency Relief funds authorized by the CARES Act, a significant amount of which could pay for iPads, laptops and other equipment for K-12 students working on classes from home.
That money comes with Maintenance of Effort requirements that could make the state cover similar amounts of funding for the next two fiscal years.
Lawmakers also agreed to accept $5.42 million in unemployment assistance to help reduce the backlog of unemployment benefit payments to Nevadans.
“While I cannot say with certainty what the business landscape will look like after the dust settles, I do believe it will never get back to the way it was before the shutdown,” advises Mike Bosma.