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September 4, 2015

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Damon Political Report

State could face a $1.1 billion liability in wake of Nevada Supreme Court ruling on local government funds

An independent analysis of the budget hole created by this week’s Nevada Supreme Court ruling indicates the problem may be almost twice what Gov. Brian Sandoval’s administration has estimated, when taking into account decisions made for the current biennium's spending plan.

The ruling, which prevents the state from taking local or special tax dollars for its general fund, calls into question a number of revenue-raising measures the Legislature has taken since 2009.

Sandoval has estimated the ruling blows a $656 million hole in his proposed budget for the next biennium that begins July 1. But the analysis done for a lobbying group with a variety of private clients indicates the number could be as high as $1.14 billion, including $452 million in the current biennium and $685 million in the proposed budget.

The analysis includes six local fund grabs by the Legislature in the 2009 session and 2010 special session:

-$188 million in room tax revenue.

-$68 million from Clark and Washoe counties property tax revenue.

-$60 million grab of capital funds from Clark and Washoe counties.

-$48 million from the counties’ indigent accident funds.

-$25 million from the Clark County School District capital funds.

-$62 million from the Clean Water Coalition—the entity that filed the lawsuit to begin with.

Money at stake in Sandoval’s proposed budget includes:

-$221 million in room tax revenue.

-$38 million from the indigent accident funds.

-$425 million from the school districts’ debt reserves (a number that has actually shrunk to $225 million).

The private analysis did not take into consideration the $83 million in property tax revenue Sandoval wants to take from Clark and Washoe counties-- a funding mechanism that Sandoval is including in his own review of questionable money.

Legislative leaders said they aren’t focused on the $452 million from the 2009 budget, largely because Clark and Washoe counties haven’t filed suit. But they don’t want to put the proposed budget at risk.

“Those decisions have already been made,” Senate Majority Leader Steven Horsford, D-North Las Vegas, said of the 2009 budget. “The focus now is on a going forward basis.”

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