Newspaper column: Not enough money to cover school spending plans

Penny wise and pound foolish?

Democratic Gov. Steve Sisolak announced recently that he is donating his $163,000-a-year salary to the state’s poorest public schools.

“I asked the people of Nevada for the chance to lead this state for many reasons, chief among them being the opportunity to improve educational outcomes for every child in every classroom in the state,” Sisolak wrote in a letter to the Nevada State Board of Education. “To show my commitment to this goal, the First Lady and I are donating my net state salary back to public education. It is my sincere hope that with these donations, I can begin to fulfill my promise to our educators, families, and children and make a positive impact on our public schools.”

According to news accounts, the money would be split among the state’s 416 poorest schools — less than $400 per school.

This is the same governor who declared in his State of the State speech that he would increase the cost to build new public schools and playgrounds.

“This session I will work to return prevailing wage to public construction projects  — as it was before the 2015 session — including, and most importantly, for our children’s schools,” Sisolak declared. “Not only do prevailing wage laws support highly skilled workers in Nevada, they guarantee our children are learning in well-constructed, high quality educational facilities. Let’s do this.”

(R-J pix)

(R-J pix)

In pursuit of that largesse for state construction unions, the Assembly at the end of April passed Assembly Bill 136, which would reverse a modest rollback passed in 2015 that reduced the prevailing wage for public school and college construction to 90 percent of the prevailing wage and raised the threshold for covered projects from $100,000 to $250,000.

The prevailing wage law requires that workers on public construction jobs be paid no less than the “prevailing” wage in the area where the work is being done. The wage rate is set by the state Labor Commissioner based on a survey of contractors. The survey is so time consuming that in reality only union shops bother to comply, meaning the prevailing wage is the highest union wage.

Every Assembly Republican present voted against AB136.

Assemblyman Gregory Hafen, a Pahrump Republican, was quoted by the Carson City newspaper as saying that the state’s school districts have estimated AB136 would add $35 million to the cost of building public and charter schools. Alexis Hansen, a Sparks Republican, said it would add 25 percent to the cost of new schools.

Strangely, Nevada System of Higher Education originally said the bill would cost it $18.5 million over the next two years, but later withdrew its fiscal note during testimony before the Assembly Ways and Means Committee, saying it was too difficult to forecast what the market will be in the next two years.

Should the bill pass the Senate and be signed as promised by the governor it will snatch funds from schools that could have been spent on such things as Sisolak’s proposed 3 percent salary hikes for all state teachers, plus 2 percent merit raises in each of the next two years.

The Clark County School District is already complaining that the funding earmarked for the district is inadequate to cover those proposed raises.

The outlook was further clouded this past week when the Economic Forum, which by law sets the amount of money the Legislature may spend during the next biennium based on current taxes, said a paltry $42.8 million more than previous estimates will be available to spend. That’s less than 0.5 percent of the $8.8 billion general fund budget.

Gov. Sisolak spun the news by boasting that the report means Nevada has the “fastest growing economy in the country and continues to outpace the rest of the nation in terms of job growth.”

Assembly Republican Leader Jim Wheeler said the Economic Forum forecast will put the governor’s no new taxes promises to the test.

“In its simplest terms, the Governor and the Democrats are trying to spend more money than is available,” Wheeler said in a statement put out by the Republican leadership. “How will Democrats keep their promise to teachers and unions while still balancing the state budget?”

Republican Assemblywoman Robin Titus remarked, “Simply put, there is not enough money to go around.”

It is time for our lawmakers to make some tough decisions and not be penny wise and pound foolish.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

 

Editorial: State budget could use some belt tightening

The members of the Nevada Economic Forum met earlier this month and came up with a forecast for how much the total state general fund revenues will be for the next two years.

The Economic Forum was created by lawmakers in 1993. It is responsible for providing forecasts of revenues for each upcoming biennial budget period. The figures are binding on the governor and the Legislature in crafting a budget, so they don’t wildly overestimate potential revenue and cause a budget crisis when funds come up short.

The forum members reported that the past two-year’s revenues turned out to be $8.244 billion and the coming two-year period should generate 7.2 percent more funds or $8.835 billion, after application of all applicable tax credits, of which there are a number.

Outgoing Republican Gov. Brain Sandoval has already drafted a budget for the next biennium, which will be handed over to incoming Democratic Gov. Steve Sisolak and the majority Democratic lawmakers, who take office in January. Of course, they all appear to anticipate spending every last dime of that $591 million windfall even though current inflation is running only 2.5 percent.

Much of the anticipated money is being targeted for expanded Medicaid under ObamaCare and various education spending schemes.

After the Economic Forum issued its forecast, Sisolak gave a statement to the press saying, “I am encouraged by how the state is performing. I look forward to reviewing the final forecast released by the Economic Forum and creating a roadmap to implement the priorities that matter to Nevadans. I am committed to building a bright future for our state and that starts with building a budget that funds the initiatives that will get us there.”

May we be so brazen as to suggest that taxpayers might appreciate an “initiative” that lets them keep a bit more of their paychecks. Or at the very least pour more of that anticipated-but-not-guaranteed revenue into the rainy day savings account for that time in the future when the outlook is not so rosy, because everyone knows that once government spends a certain amount of money it expects to continue to do so in perpetuity.

For the record, from 2011 to 2017 the state general fund budget grew by 32.3 percent, while inflation amounted to 7.9 percent.

Though we know we are whistling in the Democratic wind, we also suggest that the burdensome commerce tax passed in 2015 as part of Sandoval’s $1.5 billion tax hike be repealed. The tax was imposed even though the voters in November 2014 rejected a commerce tax at the ballot box by 79 percent to 21 percent. The commerce tax is expected to generate only $445 million in the coming biennium and could be covered by that extra $591 million in the projection.

Every Nevada business must file a commerce tax form with the state, even if the business owes no tax. For many, compliance costs exceed the taxes owed. That is a hidden tax on the state economy and retards job growth.

Lawmakers should think about the burden on taxpayers as well as the beneficiaries of their customarily spendthrift ways.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Editorial: Give state revenue windfall back to those who created it

State workers demand higher pay raises. (R-J pix)

Riddle: What is the difference between the Nevada Legislature and a drunken sailor?

Answer: Eventually the drunken sailor sobers up.

The Economic Forum, which is tasked with estimating state general fund revenues so lawmakers can dodge blame for overestimating, has found a few million more coins in between the couch cushions — $96 million more in the coming biennium and a $44 million surplus from the current year for a total of $140 million. So immediately the governor and lawmakers on both sides of the aisle started calculating just how they could spend it. The added funds hike the general fund budget to $8.2 billion over the next two years.

Not one person suggested letting the taxpayers keep some of that windfall to blow on groceries and new shoes for their children.

Gov. Brian Sandoval wants to spend the windfall on education. “I introduced the weighted student funding formula last session, and this additional money provides a unique opportunity to invest directly in students who are economically disadvantaged, English learners, gifted and talented and in special education,” he was quoted by the press as saying.

For all the good that has done over the years. Over the past four decades, according to a Cato Institute analysis, Nevada has increased K-12 public school funding by 80 percent per pupil, adjusted for inflation. During those four decades student test scores have actually fallen slightly.

Democratic Assembly Speaker Jason Frierson and Democratic Senate Majority Leader Aaron Ford said in a joint statement, “While these newly projected revenues will not be enough to fully meet our needs in public education, mental health, job training, and other vital services, we are committed to putting our tax dollars to work for the hardworking Nevadans who still feel left behind.”

How about some concern for the hardworking taxpayers who keep paying more and getting no recognizable return on their investment?

A few days later several dozen state government workers rallied near the legislative building demanding that the $140 million windfall be used to give them higher pay raises. Though the governor has included 2 percent raises in each of the next two years, the workers were demanding 5 percent each year, complaining that wages are so low many state government employees are on public assistance programs. They complained about how workers’ pay was reduced by furloughs during the recession, failing to note that they were paid the same rate of pay for the time they did work.

They also did not talk about how their pay compares to those in the private sector. According to census data maintained by the Department of Employment, Training and Rehabilitation, the weekly wage of a Nevada state government worker in the third quarter of 2016 was $1,093 a week, compared to $922 for a private sector worker in Nevada. Also, the state worker’s pay has increased 21.7 precent since 2012, compared to an increase of 13.1 percent for the private sector.

To add insult to injury, we note that the windfall-inflated $8.2 billion general fund budget is a 12.3 percent increase over the previous biennium’s $7.3 billion spending, while inflation in the past two years amounted to 2.5 percent. And the general fund is only about a third of the total state spending.

Since 2011 the state general fund budget has grown by 32.3 percent, while inflation amounted to 7.9 percent. Since 2001 that budget has grown by 122 percent, compared to 37.5 percent growth in the cost of living.

Meanwhile, the Economic Forum forecasts that the commerce tax passed in 2015 at the urging of Gov. Sandoval will raise less than $200 million in each of the coming years — less the millions the state is spending to create what is basically a Nevada version of the Internal Revenue Service.

The commerce tax is a tax on gross receipts on all businesses grossing more than $4 million a year. It has different tax tables for 27 different industries — ranging from a low of 0.056 percent for mining to a high of 0.362 percent for rail transportation — and there are 67 different tax brackets.

It is costing businesses in the state untold millions to comply with all the paperwork needed to enforce and collect the tax.

Take that $140 million windfall, add a few nips and tucks in the budget, then repeal the commerce tax. That’s the sober thing to do.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

 

There is plenty of money for Nevada lawmakers to spend and here are places to cut

You could hear the wailing and gnashing of teeth radiating out of Carson City all across the sagebrush-dotted terrain this past week when the Economic Forum forecast that the state would collect a paltry $6.33 billion in general fund revenues in the coming two years. State agencies had given the governor a list of expenditures they think they must have totaling $7.7 billion.

The governor immediately bemoaned the fact the state’s tax structure is inadequate to keep up with the demands of our changing economy and increasing population.

There were murmurs about the need for tax hikes from Democrats and tax reform from Republicans, both meaning more money taken from the citizens and given to the bureaucrats.

So, how bad is it? That $6.33 billion revenue forecast is up from the Economic Forum forecast of $5.8 billion in revenue two years ago. That is a 9 percent increase.

Nevada’s population grew by 2.5 percent from 2011 to 2013. Nationally, inflation has increased since 2012 by 3.4 percent. Social Security beneficiaries are getting only a 3.2 percent increase in monthly checks over this year and next. Thus, 9 percent is enough to cover both population growth and inflation.

It would also be helpful to note that the 2012 forecast was a bit of a lowball and the actual two-year revenue is closer to $6.27 billion. What’re the odds the same thing will happen with this forecast?

The Economic Forum was created by the Legislature in 1993 to keep the governor and lawmakers from making wildly optimistic revenue predictions and then having to scramble to amend for their excessive spending. These early December forecasts are used by the governor to prepare a budget — with or without tax hikes or extensions. On May 1 the Economic Forum will release its final official revenue estimate and that is what the Legislature must use to balance general fund revenues and expenditures for the next two years.

Gov. Brian Sandoval has already told the state agencies to pare back their budget requests.

Meanwhile, everyone is clamoring for more education funding because the state ranks 45th in the nation in K-12 spending.

Where can the state possibly find more money for education without raising taxes?

End the prevailing wage law that basically forces contractors on state and local government projects to pay what amounts to union scale. That’s $1 billion a year right there.

Stop the handouts by the Governor’s Office of Economic Development to attract new companies that just compete with existing firms.

Be less generous with tax breaks. The state allowed $3.7 billion in tax breaks in the past biennium, and that was before the $1.3 billion in tax giveaways for a proposed Tesla Motors battery plant were doled out.

Cut back on Medicaid expansion under ObamaCare. End binding arbitration for public employee unions. Reform overly generous public employee pensions. Slow the growth in public employee salaries, which exceed the national average. Toughen welfare qualification requirements. Cut the number of state occupational license boards. Acquire federal land for state and private use. The Nevada Public Land Management Task Force estimated acquiring 4 million acres of federal land would add $114 million to state coffers, and adding 48 million acres would add $1.5 billion.

But above all, enact regulatory and tax policies that encourage private economic investment and job growth, which will increase wealth, which will increase tax revenues, just as it did back in the boom days before the recession.