Governor says rainy-day fund, pay raises top budget priorities

Gov. Kenny Guinn said Wednesday restoring the state's rainy-day fund is probably his top priority this budget cycle, but that he also wants to try find money to give state workers a pay raise.

He said he wants to put more into the state's emergency fund than the $120 million already headed that way. He said the economic problems two years ago showed there really isn't that much money in a crunch.

The fund reached $135 million by the start of the 2003 Legislature but Guinn and lawmakers emptied it to cover losses from the economic one-two punch delivered Nevada by the recession and Sept. 11.

"You saw how fast it went - just one deal," he said.

Guinn said Wednesday if the economy continues to bring Nevada more revenue than projected, he wants to build up the emergency fund even more.

Although it appears the general fund will have several hundred million extra by the time lawmakers begin the 2005 session, he said much of the revenue will be eaten up by rising costs and covering holes in the budget. Among the biggest of those holes is the $89 million in estate-tax money in the university system budget. Since the federal government is phasing out the estate tax, that money will have to be made up this coming two-year budget cycle by state general fund revenue. And there is another estimated $70 million hole to replace one-time grant money from the federal government.

Then, he said, there are the increases that are outside the state's control - primarily the increased cost of utilities, rent, gasoline and other costs of operating the government - all of which have to be met before state workers can get pay increases.

But Guinn said he is hasn't given up trying to find some money for raises.

"I'm trying," he said. "I'd certainly like to."

Contact reporter Geoff Dornan at nevadaappeal@sbcglobal.net or 687-8750.

Rainy day fund facts:

Under terms of SB 8 of the 2003 legislative special session and the existing laws governing surplus funds, the state's contingency fund got an infusion of nearly $71 million.

That is 40 percent of everything over the ending fund balance needed to keep state finances running as of June 30 - the end of the fiscal year.

In addition, SB8 specifically directs $50 million of the remaining surplus to the fund.

That will bring the total rainy-day fund to $120 million.