State agencies cut requests to put budget 'back in black'

Under pressure from the governor and budget office, state agencies have now cut enough out of their proposed budgets to get the 2007-2009 fiscal plan back under the statutory spending cap.

Their original requests totaled about $1 billion more than the cap when enhancements and new programs were included.

While Director of Administration Andrew Clinger declined to offer many specifics, he said Friday the budget is "back in the black."

Much of the savings would have had to come from the Health and Human Services Department, which recently received new data reducing some of its caseload growth projections, and the university system. The most likely reduction to higher education's requested budget would be to its formula funding, which the regents had asked be increased significantly.

At the same time, a last-minute population adjustment by the state Demographer's office provided a bit more breathing room by raising that cap on state general fund spending $93 million this fiscal year to $6.025 billion and the cap for the coming two year budget cycle $124 million to $7.064 billion.

The cap statute limits growth in state general fund spending to population growth plus inflation each biennium and has been in place in Nevada since 1979.

This is the first budget cycle where the cap has become an issue. The statute requires the governor submit a proposed budget that does not exceed the cap. However, it does not apply to federal funds and the Legislature has the authority to exceed the cap.

Gov. Kenny Guinn said in an earlier interview he wanted agencies to tighten their belts enough for him to provide state workers and teachers a raise of at least 2 percent each year - 3 percent each year if possible. That, however, would cost $315 million over the biennium.

He has also made it clear he would like to fund all day kindergarten. The price tag there is about $100 million the first year and more every year thereafter to cover the state's growing student population.

The state has more money in the treasury - probably $300 million above the cap by the end of this fiscal year. But that cash can only be spent in four ways: New buildings, roads and highways, beefing up the state's rainy day fund or a rebate to taxpayers.

Guinn has already indicated he plans to use a big chunk of that money to jump-start critically needed road and highway projects in southern Nevada. With the state's highway needs projected at $3.8 billion more than the highway fund will generate over the next decade, road construction could easily consume every penny of any surplus.

But University officials have been lobbying hard for the same money. They want upwards of $100 million for the systemwide Health Sciences Center project which would dramatically expand higher education in all phases of health sciences and medicine in Nevada. The eventual cost of that project, which would involve several campuses, is expected to be nearly a half-billion dollars.

Guinn is expected to publicly detail some of his proposals in the next week or so. But whether those proposals stay in the executive budget will depend on the wishes of the governor elect.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.