Committee approves bill to take $100 million out of Rainy Day Fund

The Assembly Ways and Means Committee approved legislation Wednesday to take $100 million out of what is commonly called the "rainy day fund."

That fund was created to give the state a pad of revenue in the event there was some financial emergency at the state level.

Gov. Kenny Guinn asked for AB252. He told lawmakers it is needed to help cover a more than $180 million revenue shortfall between now and the end of June.

AB252 is the first of the governor's tax and revenue measures to get out of committee with a "do pass" recommendation this session. The others involve increasing taxes and fees either this spring or over the coming two years to cover a total revenue shortfall of $1 billion between now and the end of fiscal year 2005.

It leaves a pad of about $36 million in the reserve, officially named the Fund for the Stabilization of State Government.

If lawmakers don't approve the other tax hikes requested by Guinn this spring, Treasurer Brian Krolicki says the state treasury will be "running on fumes" by the end of the fiscal year. Guinn's Deputy Chief of Staff Mike Hillerby told lawmakers the state might make it by draining the rest of the rainy day fund, but that all it would take is one incident that causes even a slight downturn in the state's tourism-based economy to put Nevada in the red.

The most likely scenario, he said last week, is a war with Iraq.

Lawmakers haven't yet acted on the governor's request to raise cigarette and alcohol taxes, the per-employee business activity tax and slot route fees to cover the remaining $80 million of this year's revenue shortfall.

And they are just beginning to examine the governor's proposed long-range tax plan, which includes controversial increases in property taxes as well as creation of a gross receipts tax on business and a tax on admissions and amusements.

AB252 goes to the floor of the Assembly for a vote, which may occur Friday.