The Nevada State Legislature began meeting in a special session on July 8th to review proposed budget cuts needed to address the estimated revenue shortfall of $1.2 billion for fiscal year 2020-2021. Preceding this meeting, the Governor’s Office released the Nevada COVID-19 Fiscal Report on July 6th which provided updated numbers for the estimated budget shortfalls and proposed actions to address them. Governor Steve Sisolak wrote the following in the introductory letter to the report: “My proposal preserves as much funding as possible for our most essential priorities: health, education and the State workforce, so they are able to continue providing the vital services on which Nevadans rely” (all quotes are taken directly from the report).
The report points specifically to Nevada’s vulnerability to any exogenous events that reduce gaming and tourism as the state’s economy is “over reliant” on these industries. However, according to the report, the effects of COVID-19 are unprecedented. “During the Great Recession, Nevada lost approximately 180,000 jobs over nearly three years. During the COVID-19 crisis, Nevada lost more than 250,000 jobs in the past three months. Following the events of September 11, 2001, Las Vegas visitor volume reported a peak decline of 12.4 percent. As a result of COVID-19 closures, visitor volume was off 97.3 percent in April 2020.”
As a result of the impact of COVID-19, Nevada’s revenue shortfalls just for the remainder of fiscal 2019-2020 were estimated at $811 million which was partially alleviated by a transfer of $401 million from the state’s Rainy Day Fund. However, perhaps more disconcerting is the fact that based on information released by the Nevada Department of Taxation, the report estimates a $1.2 billion shortfall for fiscal 2020-2021.
Because the majority of Nevada’s General Fund supports education (K-12 = 35%, higher education = 16%) and health and human services (34%) these areas will be the most affected by budget cuts to address revenue shortfalls. What follows is a list of the proposed measures for:
State employees – a furlough of 12 days/year, merit salary increases will be frozen for State and NSHE classified employees, and 700 open positions will remain vacant in State government to “reduce costs and avoid layoffs”.
Nevada System of HIgher Education (NSHE) – “A total of $190.6 million has been identified for reduction within NSHE, including reduced operating costs, not filling vacancies and repurposing capital funds.Furloughs are also included for NSHE academic and administrative faculty.”
K-12 Education – proposed cuts of approximately $166 million that was set aside to reduce class size, support Read by Grade 3 ($31 million), fund the New Nevada Education Funding Plan ($70 million), teacher school supply reimbursement ($4.5 million), and “reductions to certain teacher incentives, college and career readiness programs, school safety, financial literacy and other categorical programs (approximately $29 million)”.
Department of Health and Human Services – “Fiscal Year 2020-21 reductions for DHHS total approximately $233 million, including sweeps of certain accounts, and impact services across the agency, including Aging and Disability Services, Public and Behavioral Health and Medicaid.
Additional information can be found in the full report here.