Lawmakers were told Tuesday unless they will agree to extend all the sunset taxes, the state will have to cut nearly $600 million a year out of the governor’s proposed $7.3 billion General Fund budget.
Gov. Brian Sandoval included nearly $550 million in his budget from extending and making permanent the General Fund portion of those so-called temporary revenue increases in his State of the State speech last Thursday.
But Director of Administration Julia Teska told the combined Senate Finance, Assembly Ways and Means committees that doesn’t include the temporary revenue increases which goes directly to the K-12 schools. She said the increase in the Local School Support Tax from 2.25 percent to 2.6 percent and the transfer of the Room Tax revenues into the Distributive School Account will generate an estimated $335 million in 2016 and another $362 million in 2017, a total of $697 million during the biennium.
“If we do not extend the sunsets, we would actually have to reduce, take out every enhancement in the budget,” Teska said. “We would have to cut $600 million a year if we do not extend those sunsets.”
The state also is on the hook for any costs from the unanticipated increase in K-12 enrollment statewide, which she said is expected to continue in each of the coming two years.
Teska did have some good news for lawmakers in the opening day of the week-long budget review: the growth of Medicaid enrollments is flattening.
“There was a gigantic increase, much greater than we anticipated during the 2013-2015 biennium,” she said.
Primarily because of he Affordable Care Act, she said Nevada added 263,000 enrollees, 160,000 of them “newly eligible” under the Affordable Care Act.
“Now we believe we are really close to that saturation point,” she said.
“Most folks who are eligible for Medicaid are now signed up for Medicaid,” said Chief of Staff Mike Willden emphasizing the point.
And because of the huge increases in federal funding under ACA, Teska said the General Fund portion of the cost has fallen from more than 30 percent to less than 19 percent of the Medicaid budget.
Teska told lawmakers the Economic Forum projected a total of about $6.3 billion during the biennium.