Cash flow issues force state to find ways to pay bills

Faced with potentially serious cash flow problems, the Nevada Budget Office has spent the last couple of months looking under every rock for money to beef up the state’s Ending Fund Balance.

By statute, the state is required to finish each fiscal year with at least 5 percent of General Fund appropriations in the bank. That pad is required to ensure, much like a homeowner, when bills come due, the balance never goes into the red.

For this fiscal year, the EFB was set at $169.75 million. But Director of Administration Julia Teska told the Interim Finance Committee on Thursday because of serious revenue shortfalls, they were looking at finishing this fiscal year with just $12.6 million in the bank.

The biggest problems were gaming revenues fell a total of $50.5 million below forecasts and the Net Proceeds of Mines tax came in $141 million under.

On top of that, unexpected increases in K-12 enrollments — especially in Clark County — cost the state an estimated $77 million more than budgeted.

The combination effectively eliminated any pad the state’s other revenue streams helped build up during the current budget cycle.

But Teska said she and her staff have developed a plan to pump the state’s General Fund checkbook up to $154.55 million by June 30.

That’s still a half-percent under the 5 percent statutory minimum but, Teska said, “I would tell you we have not stopped looking. It is still our goal to get to 5 percent by the time we close our books.”

The adjustments start by sweeping $28 million out of the state’s Rainy Day Fund. After that, she said the state will skip two premium payments to the Public Employee Benefits Program, saving a total of $20 million.

She said that’s possible because the state’s PEBP premium account has more cash right now than needed to pay the bills.

She emphasized the money is all from the state’s 50 percent of the premium payments.

“We’re not taking money from employee contributions,” she said.

The excess on the employee side, she said, is being used for benefit enhancements for the state health plan.

There are several other sources of money including Medicaid, Taxation and the university system. But the lion’s share of the new found cash — $79 million — will come from “reserve sweeps” — raking back into the General Fund a variety of funds in the agencies.

Two sources make up $48 million of that total.

She said just more than $23 million comes from the Attorney General’s office — money in a variety of pots of “old settlement funds that have not been utilized.”

An equal amount of money will come from the agencies within Business and Industry Teska said is cash largely in the same situation as in the AG’s office.

Another $11`million will be reverted from the Governor’s Office of Economic Development but she said that money will be put back into GOED’s budget in the upcoming two-year budget.

There are also sweeps of cash in agencies including the Secretary of State, Corrections, DMV, health and Human Services and education.

She said lawmakers will also be asked to replenish the Statutory Contingency Fund. That account was down to just more than $3.9 million because of unexpected costs including the litigation with San Francisco over allegations Nevada was “dumping” mental patients into that city. That lawsuit has already cost the state millions but talks are under way to settle it.

She said $12 million needs to be put back into that emergency account.