Gov. Kenny Guinn presents his two-year budget plan Monday - including substantial increases for elementary schools and a "modest" pay raise for state and school employees.
In addition, Guinn has already announced plans to return up to $300 million in surplus money to Nevadans by rebating up to $300 per vehicle in automobile registration fees collected by DMV. The rebate plan must first be approved by the Legislature.
The Economic Forum projected $840 million more revenue for the coming two years - a total of $5.75 billion - primarily because both gaming and sales tax revenues are coming in far higher than projected - more than 13 percent higher for sales taxes.
There are plenty of takers for that money - the largest being schools, the university system, human services programs and prisons.
Education
Guinn has said on several occasions his big concern with public schools is kindergarten through sixth grade. He is expected to recommend pumping an extra $100 million a year into Nevada's elementary schools.
The university system, citing 13 percent increases in enrollment, is asking the state for a 20 percent increase in total state funding.
With the $89 million estate tax replacement, that amounts to a total increase of nearly $350 million.
Indications are the system will get the vast majority of what it is requesting.
Human Services
Guinn is also expected to fund major improvements in human resources programs - particularly within the Mental Health and Developmental Services Division which has requested significant increases in staffing for its new psychiatric hospital and other programs.
Indications are he will recommend the Legislature add more than 400 positions - at a cost of some $25 million a year - plus millions more to improve other human services programs including Medicaid.
In addition, Guinn will have to boost funding in the Department of Corrections, which saw an unexpected surge in the inmate population - an increase of more than 500 to 10,500 total inmates - in the past year.
Raises
Part of what's left will be consumed by what are called "rollups." Those are normal increases in the cost of doing business including rising utility, lease and rental costs, step increases in salaries and the cost of materials and supplies. And growth will necessitate a long list of minor increases in staff at different agencies.
But that should still leave a sizable pot of new money for the employee raises he has said on several occasions he supports.
It will cost $87.1 million over the biennium to give state workers, classified university workers and public school teachers a 1 percent raise.
Guinn should have enough money left in the pot to propose a 2 percent raise costing $174.2 million over the biennium.
The Rebate
Several Guinn proposals including the $300 per vehicle rebate are technically outside the budget. With a number of lawmakers and prominent members of the public already arguing that money could be better spent on education and other needs, even the rebate is far from guaranteed.
Budget Director Perry Comeaux has said it's not possible to put that surplus into education or human services budgets as some have suggested since it is "one-shot" money while those programs are ongoing expenses to the state.
But there is growing interest among lawmakers in using the money to pay for expansion and construction of state and university buildings instead of paying for them with bonds. Nearly $280 million of Guinn's $325 million Capital Improvement budget uses bond money. With interest rates on the rise, it could cost the state anywhere from $450 million to $800 million in principal and interest to pay off those bonds over the next 20 years.
Millennium Scholarship
Also likely to get a hard look is the proposal by Guinn and Treasurer Brian Krolicki to sell $100 million in bonds to prop up the financially-troubled Millennium Scholarship program. Krolicki and Guinn originally told lawmakers the tobacco settlement money would support college funding for Nevada students until 2015 or longer. It is already using every dime in tobacco money and will be in the red next fall.
They propose using bond money and paying off those bonds with proceeds from the state's unclaimed property liquidation sales. But while the bonds would take 25 years to pay off, the money they raise would pay for Millennium Scholarships for just five years, leaving lawmakers and the next governor with the same problem all over again.
Contact reporter Geoff Dornan at nevadaappeal@sbcglobal.net or 687-8750.
