Las Vegas Sun

March 28, 2024

Official: State failing to meet cash reserve requirement

Gov. Brian Sandoval’s administration might in danger of not meeting the requirement that the state must have a cash reserve in the treasury of a 5 percent balance at the end of this fiscal year.

And this could impact the financial rating of Nevada, possibly meaning higher interest rates on bonds sold.

Jim Wells, interim director of the state Department of Administration, told the Senate Finance Committee that the reserve rate would be 4 percent or $34.5 million short of the required reserve as of June 30.

Sen. Ben Kieckhefer, chairman of the committee, said there is no penalty for failing to meet the 5 percent mark. But he’s worried this could impact the bond rating of the state.

And it means that Nevada will be starting in the hole starting next fiscal year when the proposed new taxes will kick in.

Sen. Pete Goicoechea, R-Eureka, said the picture for this fiscal year was “not good.”

Wells outlined bills to sweep $99 million extra money from state agencies into the treasury in an effort to close the reserve gap.

He said the 5 percent reserve balance needed is $134.5 million and the bills bring back $99 million from various accounts to shore up the money in the treasury. He said these transfers would not curtail services to the public.

But he added, “It will be a challenge to meet the threshold.” Much of the problem arose when the price of gold declined, meaning lower taxes collected by the state.

One bill, SB505, would suspend for two months the state’s payments into the medical insurance program for state workers. That would save $17 million this fiscal year but would not impact the medical coverage for the workers and their families, Wells said.

In SB506, $9.4 million would be taken from the reserve of the home retention fund in the Department of Business and Industry to help supplement the reserve in the treasury.

A fund for loans to help build charter schools would have to return $400,000.

The Sandoval administration intends to strip $7 million from the Catalyst Fund used to spur economic development. Wells said, however, that money is being included in the new budget that begins July 1.

Other agencies are being stripped of expected extra money in an attempt to meet the 5 percent cash reserve required by law.

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