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Nevada’s record budget surplus stirs rainy day fund debate between the governor and Democrats

Conine stands at a podium with microphones facing him outdoors. There’s a golden Nevada state seal on the front of the podium. Ford, Yeager, and Aguilar stand behind Conine.
Lucia Starbuck
/
KUNR Public Radio
Nevada Democratic Treasurer Zach Conine (front), Attorney General Aaron Ford (back, left), Assembly Speaker Steve Yeager and Secretary of State Cisco Aguilar held a press conference to outline their legislative priorities in Carson City, Nev., on May 3, 2023.

Purple Politics Nevada is KUNR’s weekly show about the Nevada Legislative Session. In this week’s episode, host Lucia Starbuck checks in with Sondra Cosgrove, a history professor at the College of Southern Nevada about the state’s Economic Forum’s forecast and what it means for the state.

Click here for a transcript of the audio story.


Episode Overview

On Monday, the nonpartisan Economic Forum met to forecast Nevada’s general fund revenue for the two-year budget for fiscal years 2023-2025. The committee projected the state will have a record $2.2 billion surplus and estimated there will be an additional $251 million compared to the forecast made in December.

Millions of dollars are from federal pandemic relief money that must be spent by December 2024, so that money is a one-time appropriation. There’s also more consistent funding, from sources such as the live entertainment tax.

“I noticed that the women got a shout-out: Taylor Swift, and Adele, Pink. There’s all of these groups that are coming in that are filling Allegiant Stadium. We’ve got the Super Bowl, that’s a one-time thing, but the F1 race is going to be consistent for a couple of years,” Cosgrove said.

What will lawmakers do with the extra money? Right now, the rainy day fund cannot be more than 20% of the state’s general fund appropriations. The governor’s administration wants to raise that to 30%, but Democratic leadership and the state’s Treasurer Zach Conine disagree.

“While I think it’s incredibly important to make sure that we’ve got a bucket prepared for rainy days, I think it’s more important that we fix the roof. And that’s the sort of priorities that Democrats are focused on today. We’re focused on making sure that we invest those dollars in infrastructure so that we don’t have to rely on the social safety net as frequently as we do,” Conine said.

The governor’s administration said they want to ensure there are enough savings to weather another potential storm.

“That is also one-time money. That’s the problem. You talk about programs that have the inability [to] sustain in the long term, and that hasn’t been defined. They haven’t given a plan that says it’s going to be able to sustain. It’s feel-good political filter,” Lombardo said. “Granted, you want to help as many people as you can, that’s the role of government, but you also have to manage it. And that’s what I’m failing to see from the other side of the aisle.”

Due to the record budget surplus, Cosgrove said the rest of the legislative session will likely have more conversations about policy, rather than what can be funded.

“We’re not going to have a discussion about, ‘Is there enough money?’ There’s enough money,” Cosgrove said. Do we just fund everything? Is the legislature just going to give the governor everything he wants? And is the governor just going to sign every bill that comes through? I don’t think so. But what does that mean then for negotiation?”

Listen to this week’s episode of Purple Politics Nevada with Lucia Starbuck to learn more about the Economic Forum’s forecast and its potential influence on the rest of the legislative session, budget discussions, and bills that need funding.


Transcript

(UPBEAT JAZZ MUSIC BEGINS)

LUCIA STARBUCK, HOST: Welcome to Purple Politics, Nevada. I’m your host, Lucia Starbuck. The name reflects the fact that Nevada isn’t red or blue — it’s both. On Monday, the nonpartisan Economic Forum met to forecast the state’s general fund revenue for the two-year budget. I checked in with Sondra Cosgrove, a history professor at the College of Southern Nevada to learn what this means.

(UPBEAT JAZZ MUSIC ENDS)

STARBUCK: What is the economic forum and what happened on Monday?

SONDRA COSGROVE: The Economic Forum got started in the early 1990s. This was right before Vegas started to get really big. We started to realize that as a state, we couldn’t just estimate anymore how much money we think we would have. But then the question was, ‘Well, who gets to decide what the revenue projection’s going to be?’ Obviously, you don’t want the political parties to do that. So what the legislature did is they created what’s known as the Economic Forum. It’s a set of commissioners who are all experts in their field when it comes to economics, to tax law. They meet in December before a legislative session to give the governor a budget estimate for how big his, or eventually her, budget can be for the next biennium. And they review all the data from December until May to see if their estimates were correct. Since, you know, we’ve come out of the pandemic, there’s been a lot more revenue, and we just learned on Monday that in addition to the 2.2 billion surplus that they predicted in December, they’re adding 251 million dollars.

STARBUCK: Where does that extra money come from?

COSGROVE: Federal pandemic money that we have to spend by December of 2024. But the federal government said, while you’re doing the expenditures, you can actually do short-term investment to generate revenue. And so if you’re somebody, you know, if you’re in the governor’s office or in the legislature, if a bill needs consistent funding, you don’t wanna use that one-time money for that. Eventually, that money’s going to go away, and now you’ve got people who need salaries or you’re going to have a building that needs to be maintained. What they’re going to do instead is they’re going to say, ‘All right, maybe the live entertainment tax,’ which we now think is going to stay higher permanently because we’re going to keep having, I noticed that the women got a shout out: Taylor Swift, and Adele, Pink. There’s all of these groups that are coming in that are filling Allegiant Stadium. We’ve got the Super Bowl, that’s a one-time thing, but the F1 race is going to be consistent for a couple of years.

STARBUCK: Can lawmakers put all the surplus away in the rainy day fund? I mean, why not save it for later?

COSGROVE: That’s kind of the argument the governor is making: Let’s be judicious and put as much money as possible. So instead of 20% of surplus, let’s do 30%, and the Democrats are saying, ‘No, we felt more comfortable with 20%.’

STARBUCK: That’s something Democratic State Treasures Zach Conine spoke about during a press conference on Wednesday.

(SOUNDBITE OF ZACH CONINE): And while I think it’s incredibly important to make sure that we’ve got a bucket prepared for rainy days, I think it’s more important that we fix the roof. And that’s the sort of priorities that Democrats are focused on today. We’re focused on making sure that we invest those dollars in infrastructure so that we don’t have to rely on the social safety net as frequently as we do.

STARBUCK: And here’s how Governor Joe Lombardo responded.

(SOUNDBITE OF JOE LOMBARDO): But that is also one-time money. That’s the problem. You talk about programs that have the inability [to] sustain in the long term, and that hasn’t been defined. They haven’t given a plan that says it’s going to be able to sustain. It’s feel-good political filter. Granted, you want to help as many people as you can, that’s the role of government, but you also have to manage it. And that’s what I’m failing to see from the other side of the aisle.

STARBUCK: On Monday, economists said Nevada isn’t quite heading toward a recession, but there are some risks.

COSGROVE: A lot of the revenue stream that are coming in, you know, we’re about to talk about bringing in the Oakland A’s and having another stadium. At what point is the market saturated? What’s the ceiling on that? Right now, we’re not seeing a ceiling. A lot of what I heard is, we think this is where it’s going to stay, but we’re not sure because we don’t have a history on this. We have to be careful not to assume that it’s always going to stay this high. It could actually teeter back down a little bit.

STARBUCK: So what do lawmakers do now with the budget forecast?

COSGROVE: In the past, during the Great Recession, it was what was going to be cut. But the last two cycles is, what was on the wishlist that possibly could be paid for now, that could get moved over? And so adjusting the state agency budgets, looking at small bills that had fiscal notes that hadn’t been funded, and parsing out the dollars as judiciously and equitably as possible, knowing you couldn’t give everybody the money they were asking for. That’s not going to be the case this time. I think you’re going to see more policy decisions being made. We’re not going to have a discussion about ‘Is there enough money?’ There’s enough money. Do we just fund everything? Is the legislature just going to give the governor everything he wants? And is the governor just going to sign every bill that comes through? I don’t think so. But what does that mean then for negotiation?

(UPBEAT JAZZ MUSIC BEGINS)

STARBUCK: That was Sandra Cosgrove, a history professor at the College of Southern Nevada. I’m Lucia Starbuck and you’ve been listening to Purple Politics, Nevada.

(UPBEAT JAZZ MUSIC ENDS)

The theme song, “Vibe Ace” by Kevin MacLeod, is licensed under Creative Commons and was edited for this episode.

Lucia Starbuck is an award-winning political journalist and the host of KUNR’s monthly show <i>Purple Politics Nevada</i>. She is passionate about reporting during election season, attending community events, and talking to people about the issues that matter most to them.
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Purple Politics Nevada is produced by KUNR’s Lucia Starbuck. Vicki Adame is the show’s editor, and Crystal Willis is the digital editor. Zoe Malen designed the show’s logo.