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. — TM