Sales tax shortfall could affect Medicaid, education funding

Assembly Democrats cautioned Wednesday that if a slowdown in a major state revenue source continued over the coming two-year budget cycle, Nevada's total revenues could be about $50 million below projections.

The shortfall possibility came up as lawmakers on a joint Senate-Assembly subcommittee reviewed the budget for Nevada's Medicaid services. The Division of Health Care Financing and Policy has requested $27.7 million to increase physician rates to 2007 Medicare levels.

Assembly Speaker Barbara Buckley, D-Las Vegas, asked whether the division could set priorities in the case it wasn't able to get all the requested funding.

"I think we haven't done enough to keep up with provider rate increases over the years," Buckley said, adding, "I worry, though, that our new sales figures for December are down. We may have to make up $50 million in the budget."

Gary Ghiggeri, Senate fiscal analyst, said after the meeting that sales tax collections aren't tracking with what was projected by the state Economic Forum. He added that if a sales slowdown continued it would affect the state's education funds. If schools don't make a certain amount through local sales tax revenue, the state must make up the difference.

Tax revenue projections for 2008 and 2009 also could shrink as a result of the lost funds and result in a smaller budget for those years.

"Our base will be smaller," Ghiggeri said.

Assemblywoman Sheila Leslie, D-Reno, said it's already hard to fund legislative priorities.

"This will make it harder to find the money for the things we need like full-day kindergarten, health care coverage, money for the homeless, because we have to first make up the deficit in revenue," Leslie said.

Charles Duarte, director of the division, said the physician rate increases currently are the agency's top priority, especially the ones proposed for certain specialty doctors.

Duarte also outlined his division's efforts to resolve $5.8 million in Medicaid overpayments plus $3.4 million in frozen payments to the Clark County School District.

The division also must deal with a $9.6 million shortfall caused by underestimated hospital payments.