The Nevada Legislature agreed Friday with the governor that, economically, it's raining cats and dogs.
They voted to drain all but $1 million from the so-called "rainy day fund" to help the state stay in the black through the end of the fiscal year.
AB252 originally sought $100 million from the fund to cover the shortfall between now and June 30. That bill was accompanied by legislation increasing alcohol, cigarette, business activity and slot route taxes effective April 1 -- to cover the rest of the projected shortfall that has developed over the past two years.
But Budget Director Perry Comeaux advised the Senate Finance committee Thursday evening, because of the expected impact the Iraq war will have on the state's tourist-based economy, they need all of the reserved money.
The amendment withdraws $135 million from the fund, leaving only $1 million. It was approved and the bill passed as an emergency measure by the Senate on Friday. The Assembly followed suit a few minutes later.
Pointing to the Iraq war, Senate Majority Leader bill Raggio, R-Reno, said, "the expectations are very real that our revenues from tourist-based sources, both sales tax and gaming tax, are going to continue to decline below expectations.
"So the prudent thing to do is to draw down the rainy day fund," he said, adding there is really no other option.
Assistant Majority Leader Sen. Ray Rawson, R-Las Vegas, said the situation points to the need to pass the taxes Guinn recommended this year as well.
Lawmakers have been very reluctant to pass those taxes, trying to see if the state can make it through June 30 without raising any tax levies.
"If everything meets the economic projections, we will finish this year with $78,000 above what the legal requirement for the state is," Rawson said. "That's gambling with the future of this state."
He said passing the "bridge taxes" to cover the rest of this year's shortfall must be done soon because, if lawmakers don't act before April 1, there's no way to keep the state in the black if something else happens.
Both he and Raggio said the situation also puts the state's credit rating at risk, which could cost Nevada even more money in the long run.
Rawson said the state should have at least a $50 million pad in the treasury to cushion against any drop in revenues caused by the war.
His thoughts were echoed by Guinn's Deputy Chief of Staff Mike Hillerby who said the April deadline is vital because, if missed, the state loses a full month's revenue from most of those taxes.
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, supported the emergency action pointing out that, just because lawmakers put the rainy day money in the general fund doesn't mean they have to spend it.
"If we don't it will go into the ending fund balance but if we need it, it will be there," he said.
Senate Taxation Chairman Mike McGinness, R-Fallon, said he has a hearing on those tax proposals scheduled for Tuesday. He agreed lawmakers will have to make a decision one way or the other next week.
