A more than $1 billion budget shortfall for the 2012 and 2013 fiscal years — which does not account for a depreciation in federal stimulus funds, a sunsetting tax increase approved in 2009, public employee furloughs, increased expenditures on health care and welfare programs and possible sweeps of unspent municipal revenues — has left the state in an unprecedented bind, legislators said.
The fact that a single largest set of cuts coupled with a single largest tax increase would still not balance the budget speaks to the straits the state finds itself in.
“There is volatility in the way we fund state government,” said Debbie Smith, an Assembly Democrat from Sparks.
For Smith, the monumental challenges facing lawmakers during the 2011 legislative session highlight a great responsibility.
“In my mind, there is no more important time to be serving in the Legislature,” she said.
Smith, as chair of the Ways and Means Committee, is tasked with forging a budget plan that must tackle the growing service needs of the public with less revenue, when adjusted for inflation and population growth, than at any time since the early 1980s.
Marilyn Kirkpatrick, an Assembly Democrat from Clark County, said the state’s tax structure is too narrow and that innovative changes were needed.
A reliance on sales and gaming tax revenues has left the state unable to support the necessary jobs programs and education initiatives that can grow Nevada’s economy, legislators said during the panel discussion.
Mike Schneider, a Senate Democrat from Clark County, said the state’s business community needed to contribute more to supplement Nevada’s budget woes.
“We’re too cheap,” he said repeatedly.
The legislative panel almost uniformly opposed minimum wage increases and a personal income tax.
But changes to the corporate tax structure and other measures could help the state better capture revenue streams, Kirkpatrick said.
Though Nevada is considered to have one of the best business tax climates in the country, Kirkpatrick correlated the state’s tax policy with high unemployment and foreclosure rates and one of the poorest education systems in the nation.
The criticism certainly wasn’t music to the ears of the hundreds of business owners in attendance, but Kirkpatrick pointed to educational successes in Virginia as a product of its larger tax structure and policy.
“If we improve education, a lot of this stuff goes away,” Schneider said, adding that business growth and job creation depends on the success of the state’s K-12 and university systems.
“I don’t think anyone goes to session with the intent to raise taxes,” said Kelvin Atkinson, an Assembly Democrat from Clark County.
Gov. Brian Sandoval has repeatedly stated his opposition to any tax hikes.
Getting businesses back on track, growing them and, ultimately, recruiting new employers to the state has become a prime area of focus for legislators on all sides of the political aisle.
“I think we should all be stuck on how many jobs we’re going to create,” Atkinson said.
There is no question that legislators believe job growth is the only thing that can obviate more and more budget cuts until there is nothing left to slash.
“We have to invest in ourselves,” Schneider said.