Education budget woes grow as sales taxes shrink

The chances of increasing public school funding grew less likely Tuesday as staff advised legislative money committees of yet another revenue shortfall.

Lawmakers were told earlier this month sales tax projections will have to be cut back. That means districts will get less money from the Local School Support Tax as well as less sales tax revenue for the state. Because the state is legally required to make up any shortfall in school district revenues, that will cost the state $81.1 million over the next two years.

If that wasn't bad enough, legislative fiscal staff advised the committee Tuesday that property tax revenues dedicated to support of school district budgets will also be less than projected when the state budget was built. Statewide, 50 cents of the property tax in each county goes directly to school districts and another 25 cents is dedicated to public schools through the state budget.

The effect will be a loss estimated at $31.7 million over the next two years and, again, the state is legally required to make up that money.

The bottom line - $109.8 million more state money will be required just to keep public education budgets even with current spending.

Asked about the effect that news will have on the Assembly's plans to expand school funding, Speaker Barbara Buckley, D-Las Vegas, made it clear she isn't giving up on all-day kindergarten, expanded vocational education programs and other initiatives. But she declined to detail her plans.

Senate Majority Leader Bill Raggio, R-Reno, who questioned the state's ability to pay for all-day kindergarten even before the revenue shortfalls were announced, said he doesn't see how lawmakers can expand education funding.

"We have to deal with reality," he said. "The revenues are diminishing as we speak and we're going to be fortunate to fund basic budgets."

He said any real enhancements for K-12 education "would have to be at the expense of other programs."

Assemblywoman Sheila Leslie, D-Reno, said the shortfalls are "bad news."

"The loss in revenue is really disturbing and it's going to make it very difficult for us."

Assemblywoman Debbie Smith, D-Sparks, said the revenue report was "totally depressing for me today."

"I hate to cut anything out of the K-12 budget," she said. "This is not a good situation."

"I thought there was a little glimmer of hope when they found the Medicaid savings," said Senate Minority Leader Dina Titus, D-Las Vegas. She referred to a projected decrease in Medicaid needs for the next two years that would save the state $52 million.

"But now, I don't know what we're going to do."

The report came as an Assembly Ways and Means/Senate Finance joint subcommittee made its first attempt to close public education budgets for the 2007-09 biennium. With the passage of the Education First amendment, they must settled on education funding before they can fund any other state programs.

While the joint committee made progress in a number of areas, the big ticket items - including class size reduction and the per-pupil base support in the Distributive School Account - were put on hold until the Economic Forum finalizes revenue projections May 1.

Based on $5,145 per student in fiscal 2008 and $5,354 in 2009, the governor's recommended DSA budget totals $5.24 billion. Of that total, just over $2 billion comes from the state's general fund. To make up the shortfall in local revenue sources, the state will have to add $109.8 million more from the general fund.

Among the budgets closed Tuesday are proficiency testing, teacher education and licensing and education support services.

The joint subcommittee also agreed to change the subsidy for retiree health benefits from a line item in the state budget to part of the basic support formula. That has the effect of putting the responsibility for those subsidies on the individual school districts rather than the state.

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