Gov. Brian Sandoval at his office in December.
Today is the day Gov. Brian Sandoval lifts the veil on his plans to balance Nevada’s budget for the coming two years.
His State of the State speech to the combined membership of the 2015 Legislature is set for 6 p.m. today in the Assembly Chambers.
That plan, he has promised, will improve and reform funding for education — which he has said is going to be the top priority of his second term. But at the same time, he has to provide for host of other obligations the state faces, including the rising cost of the state’s share of Medicaid.
The task is daunting since, between federal mandates, rising costs in a long list of services outside state control and a list of revenue streams currently set to expire June 30, he’s looking at a gap between available revenue and what agencies say they need approaching $2 billion.
Sandoval has repeatedly declined to give any details of how he’ll make everything work.
Government officials are simply hoping that doesn’t mean dumping more costs on them — a key feature of the last three budget cycles.
Reports say Sandoval is looking at a gross receipts tax on businesses designed to generate some $430 million and planning to, once again, extend the sunsetted taxes and diversions generating $1.18 billion in the current budget.
In addition to education, Sandoval has said he’s committed to trying to restore benefits cut from state workers during the recession. He said he wants to end the remaining unpaid furloughs and continue the restoration of step pay increases.
“State employees are a priority,” he said in an interview in October.
Those workers were going to find out whether he was able to do so tonight.
Sandoval’s task was further complicated by November elections that installed a much more conservative Republican majority in the Assembly. It wasn’t clear at this point exactly what if any revenue enhancements he would be able to get through the lower house.
And then there’s the increased state commitment to pay Medicaid costs stemming from the Affordable Care Act. Sandoval’s Chief of Staff Mike Willden said in June that could add up to $400 million to the budget, more than a third of which would have to be paid by the state.
That cost is outside the state’s control and, as Nevada recovers economically, the percentage the federal government pays is almost certainly going to be reduced, further adding to the burden on state finances.
There have been some indications recently, however, Medicaid may not cost as much more as Willden feared since many of those newly-eligibles have already signed up for the program. There may no longer be a large backlog of people eligible who have not yet signed up.
There are also inflationary cost increases such as the price of prescription drugs and healthcare costs for everyone from prison inmates to the mentally ill.
As if Sandoval didn’t have enough to deal with, the Public Employee Retirement System Board in November ordered a 2.25 percent premium increase effective July 1. Split 50-50 between employee and the state, that will cost the state more than $10 million a year.
Even as the governor seeks a way to raise K-12 education funding, the state is facing a shortfall — particularly in Clark County — in meeting its current budgetary obligation. The state had to move money from this fiscal year (2015) back to FY2014 to cover a nearly-$30 million shortfall caused by rising enrollments. The state, legally, is on the hook for those increases.
Since those students won’t go away this year, that means another $30-plus million shortfall for a total this biennium of $60 million.
That doesn’t include apparent enrollment increases in Washoe and several other school districts as well but those numbers weren’t yet available.
The unanticipated increase in student populations won’t go away in the coming biennium either, so the state will have to pump millions more into school budgets just to stay even.
Sandoval and educators have been discussing changes to the funding formula for K-12 education. The existing formula has basically been in place since 1968 and Clark County officials say it’s no longer giving them their fair share.
Superintendents in the state’s 17 school districts want $203 more per student per year for 10 years to bring funding in line with the national average by 2025.
“I don’t think anyone think it’s acceptable or respectable to be at the bottom,” Lisa Noonan, president of the Nevada Association of School Superintendents, told The Associated Press. “We feel it’s a reasonable request.”
Superintendents said last week they’d also like to:
Change the formula Nevada uses to fund education by paying 50 percent more per pupil for students living in poverty, enrolled in special education or designated as English language learners.
Provide full-day kindergarten programs throughout Nevada over the next two years. About half of Nevada kindergartners are in full-day programs, and some have to pay for the privilege. The rate is about 79 percent in Clark County.
Expand the number of Zoom Schools from 24 to 56. Zoom Schools have high numbers of English language learners and get additional state funding.
To fund their vision, superintendents want lawmakers to reconsider a law that bars property tax bills from rising more than 3 percent a year.
The Nevada Policy Research Institute, a conservative think tank with sizeable influence in the Republican-dominated Assembly, disagrees.
“It would be devastating for many taxpayers,” said Victor Joecks, NPRI’s executive vice president.
The NPRI also opposes efforts to continue temporary “sunset” taxes that have been extended multiple times — unless lawmakers agree to change collective bargaining law.
School boards bound by union-negotiated contracts don’t have control over their personnel costs, Joecks said.
Sandoval said one concern is to make sure rural counties are “held harmless.” But that’s the same thing he and higher education officials said about community colleges when developing a new funding formula there.
It didn’t happen and Western Nevada and Great Basin colleges have been trying to survive on significantly less cash than they received five years ago.
The Associated Press contributed to this report.