Nevada's shortfall to hit $3 billion for 2011 Legislature

The Gibbons administration and lawmakers used every trick in the book to fill the $805 million hole in the current budget.

But that shortfall pales in comparison to what they will face when the 2011 Legislature meets to prepare the next state budget. A review of figures provided by the Legislative Counsel Bureau and the Budget Office shows that the current budget contains $3 billion in revenues that just won't be there in 18 months.

Start with the American Recovery

and Reinvestment Act. A total of

$763.3 million worth of stimulus money is in the current budget and, unless the federal government creates another stimulus program, won't be there for the 2012-2013 budget cycle.

Fully half that total goes to Medicaid and related entitlement program funding.

But the biggest single piece of revenue that, under current law, will not be available for the next budget is in the "revenue adjustments" - tax increases - approved by the 2009 Legislature. Almost all of those increases are scheduled to sunset June 30, 2011. They total $571 million this fiscal year and $579 million for Fiscal 2011 - a total of

$1.15 billion.

Another statutory change approved in the 2009 session was the state's furlough plan designed to reduce state salaries 4.6 percent by making employees take an unpaid day off each month. It also is scheduled to sunset, which will add about $300 million to the total revenue shortfall faced by the state.

Among those revenue sources is the $219.8 million in room tax hikes approved by voters. Under terms of that ballot question, those revenues go to K-12 education next budget cycle, not to the state.

The $83 million business license fee revenue and $345.7 million from the higher Modified Business Tax also sunset unless lawmakers decide to continue them.

Those and other changes, added together, come to more than $2.2 billion in funding the state would have to find in order to continue existing programs without further reductions.

Director of Administration Andrew Clinger confirmed those numbers, but said they don't include "roll-ups" - increases in expenses the state faces that aren't within its control. The last two cycles, roll-ups have come to just about $1 billion.

The largest are tied to caseload growth in programs like Medicaid and welfare, the prison population and public school enrollment.

This budget cycle, caseload growth cost the state $469 million.

Another cost is medical and health care inflation which results in federally ordered increases to Medicaid and other rates - a $52 million hit this budget cycle.

That inflation also hit mental health programs and prescription costs in Nevada's prisons for several million apiece.

When everything is added together, the total is just under $3 billion. Whether the final number goes higher or lower depends first on how quickly Nevada's economy begins to recover.