Las Vegas Sun

November 28, 2015

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State agencies still trying to determine effects of federal cuts

Federal government programs in Nevada are about to take a hit, but nobody seems to know just how much the blow will hurt.

Congress let a 5 percent cut go into effect this year, meaning federal programs in Nevada will see a negative impact of about $60 million a year if those cuts continue because of federal inaction, said state budget director Jeff Mohlenkamp.

But Mohlenkamp also said state agencies are still trying to figure out where the hammer will come down the hardest and whether some of the cuts will materialize.

“At the end of the day, I'm going to be honest with you, when I give you the numbers, they're wrong,” he told a legislative committee Saturday.

Legislators meeting in Carson City need to know about the federal cuts so that they can plan to backfill losses with state dollars if they deem it necessary. Nevada’s legislative session ends June 3, so they don’t have much time to act.

Mohlenkamp said most state budget directors he’s talked to say states are taking a wait-and-see approach to determine what the federal government may do with its next budget, which begins Oct. 1.

“The states are quite honestly simply not really engaged in any meaningful backfill of these federal dollars,” he said.

Instead, he recommended that the Legislature take precautions and dump some extra money in the state’s “rainy-day fund,” which is akin to Nevada’s savings account for unexpected expenses.

A panel of official state economic forecasters granted the state an extra $37 million last week because the economy is slowly improving. Mohlenkamp said the Legislature could reserve some of that money for the rainy-day fund.

Gov. Brian Sandoval earlier tried to assure Nevadans that his administration is managing the federal budget cuts, and Mohlenkamp’s brief to legislators represents the latest public statement in the management plan.

Although the budget cuts originate with Congress at the federal level, Nevada plans to get about $6 billion in federal dollars during the next two years.

Many other federal government agencies operate in Nevada and will be subject to budget cuts, which result from the failure of Congress and the White House to avert self-imposed cuts designed to be so draconian that the Republican Congress and Democratic White House would be forced to strike a budget deal.

Their failure left state governors to manage the budget cuts in their respective states.

“Unlike elected officials in Washington, we must take swift action to mitigate the extensive consequences,” Sandoval said in a statement in February. “My administration started planning for sequestration last summer, knowing we may need a contingency plan should it go into effect. While we have worked to set money aside and have a plan to move forward, there are still some areas of the budget which will be affected.”

The most obvious effects of the federal belt tightening have been seen at airports, where travelers experienced delays related to the cuts. Congress voted to end those airport delays by paying air traffic controllers to stay on the job.

“When it came to the air traffic controllers, I was kind of surprised that it came as a surprise,” said Sen. Debbie Smith, D-Sparks, who noted that making government service providers take days off would result in slowdowns in services.

Mohlenkamp said the largest meaningful reductions in federal funding are in programs that generally serve low-income Nevadans.

The cuts may affect the state’s ability to deliver its Women, Infants and Children services, increase wait lists for child care services, and reduce the state’s ability to help low-income Nevadans pay energy costs.

Schoolchildren in low-income families may also see reductions in services, although Mohlenkamp noted the state is increasing English-language learner and all-day kindergarten programs in low-income schools that could offset the federal cuts.

Legislators concluded that it would be wise to put money in the bank to make sure they’re able to pay for programs should federal cuts continue.

“We do need to figure out a way to put some money aside in a contingency fund,” said Assemblywoman Maggie Carlton, D-Las Vegas, who chairs the Assembly’s Ways and Means committee.

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