Falling property tax revenues force huge cut in state building plan

Both lawmakers and agency heads were warned Thursday that falling property tax revenues across the state will force a huge reduction in state construction programs for the coming biennium.

Director of Administration Andrew Clinger said the current best estimate is that $126 million will have to be cut from the $350 million Capital Improvement Project budget. He and Maud Naroll, chief planner for the budget division, warned that the situation is still developing and that, in a worst case scenario, that number could double, effectively wiping out the construction program proposed by Gov. Jim Gibbons.

Naroll said that would leave just about $60 million for construction. That is just enough to do the $34 million worth of maintenance required for state buildings in the coming two years and one critical project.

That project would most likely be the 36 bed Chld and Adolescent Hospital in Las Vegas for $24.5 million.

The problem is falling home and property values across the state are resulting in lower tax collections. Treasurer Kate Marshall has projected a 6.5 percent decrease in revenue for 2010 and 3.5 percent less in 2011.

That reduces the amount of bonds the state can issue using its 17 cent share of the property tax " most of which is already committed to existing bonds.

"We're asking all the agencies to look at other obligations and see what can be deferred," said Clinger.

"We're looking at everything that touches the 17 cents," said Naroll.

Those other obligations include funding for the Nevada Department of Transportation, currently on the list for $30 million in 2011, water project bonds which totalled $13 million in 2008, the $3 million annual cultural affairs bonding program and Tahoe bonds. He said it might be possible to defer some of those programs for at least two years, making more money available for construction bonding.

In addition, there are the so-called Question 1 bonds which fund recreational and open space projects around the state. Clinger said one possibility there is for lawmakers to reauthorize those bonds, extending the time in which they can be issued and repaid and allowing potentially lower intererst rates by spreading the payments over a longer period.

Legislative analysts said they had not yet had time to review the calculations and provide their own input.

The news comes just one week after the Gibbons administration presented a revised CIP budget which removed the $221 million in bonding for Prison 8 and replaced it with several university system construction projects. Clinger said his staff, the public works board and governor's office will be reviewing the program to determine what changes must be made.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.