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October 19, 2014

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Q&A: Why is Nevada last when it comes to getting federal money?

Nevada ranks dead last in per capita federal funding for health, education, housing, science and transportation, according to the Brookings Institution.

Instead, other states’ residents are reaping the benefits of federal spending even as Nevada maintains some of the nation’s highest unemployment and foreclosure rates.

While Nevada’s last-in-the-nation ranking is nothing new, a speaker from Brookings Mountain West will be in Las Vegas this week to explain Nevada’s poor performance.

The policy institute is hosting a free lecture at 5:30 p.m. Wednesday at Greenspun Hall on the UNLV campus.

Tracy Gordon, a visiting Brookings fellow at UNLV, will deliver the lecture “By Choice or by Chance: Why is Nevada Last in Federal Funding and What Can Be Done About It?”

The Sun spoke to Gordon on Monday about her upcoming talk.

How long has Nevada been last in the nation?

I’ve been looking at the last 10 years or so, and in that period Nevada has consistently contributed more in taxes than it gets back in spending, so it’s a quote unquote donor state.

There are donor and recipient states in any kind of federalist system. That’s always been the way in the United States. You don’t necessarily want to be a recipient state because that means you have characteristics that require you to have more money than you’re able to raise in terms of taxes.

Is this a problem for Nevada that we’re last?

It is striking how Nevada does seem (to be) at the bottom of the list no matter how you cut it in terms of federal grants per capita or absolute amounts and various metrics. When you dig a little bit deeper, then you see that some of this is explained by demographics. But I think the bigger issue is … on the discretionary (spending) side, that’s really where maybe the state could do more. You don’t want to leave money lying on the table, basically. The (recent federal grants for) job training, that was a case where there was something like $2 billion available and the state just sort of didn’t go for it.

Whose responsibility is this?

It requires a state’s (congressional) delegation to work effectively together. Having a more senior person, if you look at these general studies, having more senior members of Congress acting on your behalf certainly helps. But you certainly want a state delegation to work together, and from a state’s perspective, you have to go after the money when it’s there. So I think it’s a combination of those two things.

The title of your upcoming lecture poses a question: by choice or by chance? Which is it?

It’s both. The important thing people need to understand about any federal system is the virtue of any federal system is diversity. States end up in different places oftentimes because of where they start. A lot of differences between Nevada and other places is baked into the cake. So that’s the "by chance." You have a certain endowment of resources, and that can include things like natural resources and energy as well as the populations you’re serving.

The "by choice" part is the sort of policy choices you make.

How does Nevada’s decision to opt in to the Medicaid expansion under President Obama’s Affordable Care Act come into play here? Isn’t that a lot of new federal money?

I think the ACA expansion just illustrates this general tension between the federal government and the states, the uncertainty at the state level when it comes to putting together a budget, especially now with the federal government in such seeming disarray when it comes to the budget process. The larger issue is uncertainty about how federal policy decisions will affect not just state and local governments but state and local economies and the recovery that is underway. It’s very hard to even put together a budget when you don’t know what grants from the federal government are going to look like. We saw this last year with the fiscal cliff.

Does that mean that Nevada is having this discussion too late, that we’ve missed the boat on a lot of this money?

No. The federal government faces serious long-term budget challenges, and for that reason we could see some changes to major programs affecting state and local governments.

The federal government faces this long-term position of an aging population and rising healthcare costs, so as a result they’re looking at things that cost a lot like tax expenditures and major programs, so that’s a bigger source of uncertainty for state and local governments.

The sequester decreased money to all state and local governments.

The federal government continues to play a big part in state and local finances, but the terms of that arrangement are anything but clear in terms of the federal government’s long-term fiscal prognosis.

How do you link all of this state, local, federal spending all together?

I think that everyone has an interest in understanding where their government gets money and where it spends it, and a significant amount of money comes from the federal government. So we’re all in this together. It sounds sometimes like a very elegant waltz, but it’s really like two kids in a cotillion class and they’re kind of stepping on each other and kind of annoying each other but they’re still kind of locked in this embrace together. I don’t see the terms of the relationships changing that much, but certainly I think we’re in for a couple of rocky years ahead in terms of things the federal government would like to do with the ACA, problems the state governments are dealing with and problems the federal government is dealing with.

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