Horsford says governor’s budget acknowledges $2.5 billion deficit; school district scheme may lead to property tax hike

Wednesday, Feb. 9, 2011 | 3:43 p.m.

State Senate Majority Leader Steven Horsford said Wednesday the Sandoval administration, through its use of gimmicks in its budget, has acknowledged a $2.5 billion deficit. Horsford’s analysis can be seen in the document I have posted at right.

Horsford's analysis includes what very few have seen, which is that Gov. Brian Sandoval actually has $1.1 billion in new spending and $1.4 billion in cuts. As I have pointed out, those “revenue reallocations” are of questionable budgeting soundness. Horsford, in an interview, seemed less concerned with taking the teacher’s union room tax money or that insurance premium tax loan (although he, too, sees it as a mortgage), but he raised several questions about the pilfering of capital reserve funds from school districts.

Clark and Washoe trustees are expected to discuss this gimmick soon, and the southern trustees are expected to raise questions about whether this could lead to as much as a 30-cent property tax increase that would be triggered if the bonds cannot be repaid. The administration believes property values will appreciate enough to pay off the borrowed bond money, but some think that is optimistic. The impact on the districts’ bond rating also may be significant, and some may have to restructure the debt by extending it, which also will be expensive.

I asked Horsford what he intends to do, and, of course, he is not going to commit to any tax increase yet. But remember, he has said half the deficit should be cuts and half new revenue. And he and Sandoval seem to be on the same page on the amount of cuts ($1.25 billion). And he did say: “I’m not going to pass the budget with these cuts to education.”

I’m not sure, but as chairman of Finance and majority leader, I think he has the power to make good on that promise. And I hear lawmakers are going to embark soon on field hearings in certain districts to try to build support for that $1.25 billion in taxes, whatever the vehicle turns out to be.

The real question as I have always said: Will business folks who actually believe new revenue is called for make their wishes known to Sandoval (I think some have) and then speak publicly to give cover to GOP lawmakers?