University officials point to $93 million hole in budget

Senate Majority Leader Bill Raggio agreed with university officials Thursday there's a $90 million problem in their budget.

At the same time, however, he warned them not to expect lawmakers to add much more to the $1.2 billion spending plan recommended by Gov. Kenny Guinn.

Guinn agreed to support approximately the amount requested by the university system for the next two years. But, with state funds in short supply, he did so by increasing the amount of estate tax from just over $5 million to nearly $93 million.

University officials say that will use up the estate tax in two years, even as the Congress moves to eliminate that revenue source.

Vice Chancellor for Finance Dan Miles told members of the legislative money committees that means two years from now, the state will have to pick up the tab for all those programs funded by the estate tax revenue.

Chancellor Jane Nichols said there would be serious problems if lawmakers decided not to make up that money in 2005.

"We're going to have a $90 million hole to fill in 2005," Raggio said.

Miles warned the Senate Finance and Ways and Means committees his projections show the estate tax might not even cover the $93 million this time.

Even though he shifted that much of the budget to the estate tax, Guinn recommended to an overall increase of more than 22 percent for the university system. The majority of that $250 million increase is the $143.7 million needed to cover the projected 21.6 percent increase in enrollments over the next two years.

But unlike state workers, there is money in the proposed budget for salary increases for professors and other professional employees. The so-called "merit pool" provides increases up to 2.5 percent based on performance and totals $19.3 million.

Part of the increase -- about $50 million over two years -- will come from the students in the form of increased fees. Resident per credit fees will increase from $79 this year to $91 by 2005. Non-resident fees, tuition and other categories of fees will rise by roughly the same percentage. That maintains their share of the total budget at about 20 percent.

The majority of the budget will come from state funds -- about $891 million over two years under the governor's proposal.

Before submitting the budget to lawmakers, the governor trimmed more than $66.6 million in other requests from the package recommended by the university system. Nichols told lawmakers she would be asking them to restore some of those items because of their importance to the operations of the campuses.

But Raggio made it clear that's going to be a tough sales job.

"I think we'd better stick to the governor's budget unless there's some hurdle we have to get over," he said, "unless you have something compelling."

University officials will present their case in detail once the 2003 Legislature officially opens.