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August 3, 2015

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Sandoval adviser: Court ruling blows hole in budget 10 times larger than expected

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Justin M. Bowen

Gov. Brian Sandoval addresses the Las Vegas Chamber of Commerce Wednesday, January 26, 2011 at a luncheon held at the Four Seasons Hotel in Las Vegas.

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A ruling Thursday by the Nevada Supreme Court opened a $656 million hole in Gov. Brian Sandoval’s proposed budget, a problem roughly 10 times what had been originally anticipated, according to new figures from his administration.

In a late-night press conference, Sandoval’s senior adviser, Dale Erquiaga, announced the new figures after the governor’s legal counsel advised interpreting the ruling broadly.

“The magnitude of the problem is much larger than anticipated,” Erquiaga said. “It’s roughly 10 times worse than some people originally thought.”

The court’s decision centered on a dispute over whether the state could take $62 million in user fees from the Clark County Clean Water Coalition for a scuttled water project.

The precedent-setting decision, however, applies to many of the local money grabs Sandoval had relied on to help him avoid raising taxes.

In addition to the $62 million from the Clean Water Coaltion, Sandoval now must find a way to replace the following revenue sources:

• $38 million from counties’ indigent accident and medical assistance funds.

• $247 million from the school districts’ debt reserve funds.

• $83.4 million in property tax diversions from Clark and Washoe counties.

• $225 million from a room tax increase earmarked for education funding.

Democrats had already rejected several of Sandoval’s funding mechanisms, finding ways to avoid the debt reserve, property tax and room tax grabs. That alternative relies on extending 2009 tax increases set to expire.

Removing the sunset on those taxes would net the state $712 million.

“We won’t speculate tonight what the solutions are,” Erquiaga said. “The problem is much worse than we thought. We’ll begin working on solution.”

Sources close to the governor said he does not have the appetite to cut $656 million from the already beleaguered state budget and he’ll likely support extending the 2009 tax increase.

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