It’s impossible to know how federal sequestration will affect Nevada because it’s so unclear what the federal government is going to do, Director of Administration Jeff Mohlenkamp told lawmakers Saturday.
“At the end of the day, when I give you numbers, I’m going to tell you they’re wrong,” he told a joint Senate Finance, Assembly Ways and Means Committee.
He urged lawmakers to help him and the Sandoval administration plan for the scheduled federal budget cuts by setting aside money and giving his budget office more flexibility to move cash around when lawmakers aren’t in session.
The high estimate is that sequestration could cost state government $60 million a year, Mohlenkamp said. That would at least be partly offset by federal cash the state doesn’t collect because of declining caseloads and programs where the state wasn’t able to spend the federal dollars it qualified for, he said. Historically, Mohlenkamp said, that would cut the $60 million figure about in half.
“Generally, it’s about 5 percent to programs that aren’t exempted,” he said.
Several major federal funding streams are exempted, Mohlenkamp said, including Medicaid, food stamps, commodity foods, welfare and highway fund dollars.
“It’s really unclear what federal funding we’re going to see going forward,” he said.
Mohlenkamp said the governor’s original plan was to draw down the rainy-day fund from $85 million to $15 million this next biennium.
“My suggestion is we don’t drop all the way down to $15 million, that we leave a little bit more in the rainy-day fund,” he said.
In addition, Mohlenkamp said Nevada’s tobacco settlement money came in higher than expected this year and lawmakers should “look at keeping some of those funds in the Healthy Nevada fund as a reserve.”
“I’ve talked about flexibility being one of the key elements in helping us to manage this,” he said. “Even if it’s targeted flexibility, I would support that.”
But Assembly Ways and Means Chairwoman Maggie Carlton, D-Las Vegas, said lawmakers have a problem when the administration moves money they put in a certain program to another use.
“We do need to figure a way to put some money aside, maybe in a contingency fund, and put a fence around it,” she said.
Mohlenkamp listed a number of programs the administration is concerned about.
The Women, Infants and Children program, he said, could see cuts in 2014-15, as could child care. There is less concern about the Ryan White HIV medications grant money, Mohlenkamp said, because of drug rebates available to provide medications for people who use those medications.
He said the administration is keeping its eye on special-education funding but that the budget plan increasing certain education resources will mitigate some of the impacts. That includes the proposed increases to English-language-learner and all-day kindergarten programs.
Mohlenkamp said that as the federal government makes decisions about sequestration, he and other state budget officials are hoping for some flexibility to enable them to deal with whatever is finally sent to the states.
“We’re working with our leadership in Washington,” he said. “We hear about flexibility, yet we never see flexibility.”