As Nevada and the rest of the nation weather a torrent of gloomy economic news, most of us seek sunshine and a positive turn of events. However, we applaud legislative efforts to look even further ahead and think about the next fiscal downturn.
One such proposal on the table is an Assembly bill that aims to beef up the state's Rainy Day Fund balance. Backed by Speaker Barbara Buckley, D-Las Vegas, Assembly Bill 165 proposes to put more money in a savings account when revenues come in higher than projected. Under existing law, the state's ending fund balance can build a cushion of 10 percent more than the statutory minimum. Forty percent of any money over that goes to the Rainy Day Fund. The rest goes in the treasury.
Buckley's plan also would bank money up front each budget cycle. It would mandate that the government and Legislature start the budget process by setting aside 1 percent of the revenue projected by the Economic Forum for the emergency fund. During difficult financial situations, such as this year, the Legislature would not have to automatically set this money aside.
AB165 also raises the cap on how much money can accumulate in the fund from 15 percent of the General Fund to 20 percent.
As Buckley recently noted, not even those changes would have saved the state this year. But it could reduce some of the usual boom-and-bust cycles the state experiences over time.
"Creating programs in good times to destroy them in bad times makes no sense," Buckley argued at a Ways and Means Committee meeting.
The proposal has received support from the university system, both the Reno and Las Vegas chambers of commerce and Lt. Gov Brian Krolicki, who said he favored a similar concept while state treasurer.
There's probably not a better time to brace for future economic downturns than during the sting of a current financial crunch.