Sequestration stands to cost state $38.6M

Nevada's government will be hit to the tune of $38.6 million this federal fiscal year if Congress doesn't avoid sequestration, Gov. Brian Sandoval said Thursday.

Without congressional action today, $85 billion in previously planned, wide-ranging federal spending cuts will start having an impact when the congressional continuing resolution expires March 27.

Sandoval said he wants to assure residents the state has been preparing since fall. He said that total covers only the impact to state government, because he has no power to reduce the impact on federal employees from the military to the Bureau of Land Management.

"I'm very concerned for federal employees who will be taking those 20 percent furloughs," he said, adding that amounts to an unpaid day off every week.

A large number of those employees are employed at the Fallon Naval Air Station - about 900 - and an even larger number are at Nellis Air Force Base outside Las Vegas.

He and Director of Administration Jeff Mohlenkamp said the impact will be felt over time as the different pieces of sequestration come into play. Mohlenkamp said education cuts, for example, won't come until next school year.

But the full impact has been pretty much impossible to calculate because there are so many unknowns, they said.

"We have planned for this to have resources to address these needs," Sandoval said.

But Mohlenkamp said the funds available to meet the needs are basically the $17 million left in the state's rainy-day fund included in the governor's proposed budget.

While that is far less than the estimated $38.6 million impact, he said, no one yet knows whether the impact on state budgets will be that deep.

Mohlenkamp, however, said a number of vital programs are exempt from the sequester, including Medicaid, food stamps, welfare payments, foster care, money for vaccines and highway funds. He said he believes Social Security disability funding also is protected from the impact.

Budgetary items not protected from cuts include the basic state special education grant, which will lose $3.77 million of its $67.4 million total; the unemployment insurance administration grant, which will lose $1.96 million; and the supplemental feeding program within the Women, Infants and Children (WIC) program, which will lose $2.57 million. In addition, the Child Care and Development Block Grant will lose $881,000 of its $15.7 million grant, and the $13 million Substance Abuse, Prevention and Treatment block grant will be reduced by $856,000, the Social Services block grant by $856,000 and the $3.8 million mental health block grant by $214,000. There also are cuts to programs providing a variety of other social services.

Important to rural counties is the reduction in the BLM Payments In Lieu of Taxes (PILT) program, which will lose $1.4 million of its $22.8 million total this federal fiscal year. PILT compensates rural counties, which have disproportionate percentage of federal land because the federal government doesn't pay property taxes. Some Nevada counties are more than 95 percent federal, leaving them almost no tax base to pay for services.

Finally, the Head Start program will lose $1.6 million of its $28.6 million in federal funding for the remaining seven months of this federal fiscal year.

Sandoval said he will meet today with legislative leadership to discuss how best to deal with the impacts - including asking for some increased flexibility to move money around within the overall state budget.

"This is where the rubber hits the road in this state," he said.