Friday, Aug. 2, 2002 | 11:07 a.m.
CARSON CITY -- Faced with a deficit of more than $165 million, Gov. Kenny Guinn says he intends to tap into the state's "rainy day" fund in February to help bail the state out of the hole.
If he gains approval from the Legislature, this would be the first time money has been taken from the fund, which was established in 1993 after the state ran into a budget crunch two years before that.
The fund has grown to $136.3 million. Guinn said he will ask for about $80 million of that when the Legislature convenes next year.
The governor has concentrated his efforts in the past week on the special session of the Legislature to take care of the medical malpractice issue. But he said he will turn his attention next week to the budget problem.
State Budget Director Perry Comeaux said he advised Guinn to look to the rainy day account to solve some of the budget problems.
"That's what it is there for," Comeaux said. "It does not make much sense to cut $165 million when you have a $135 million fund."
The $165 million shortfall includes additional money that will have to be sent to the public schools because their revenue from the sales tax is below the state's estimate. The shortfall also includes extra money that will be needed to carry the Medicaid program through this fiscal year.
The rainy day fund can be used only if revenues come in 5 percent lower than anticipated or if the governor and the Legislature declare a financial emergency. The Legislature doesn't return to session in February next year. Guinn will apparently ask the 2003 Legislature to declare the emergency when it convenes in February.
Senate Majority Leader Bill Raggio, R-Reno, appeared cool to the idea. He said the fund should be "used only as a last resort."
He said he has not talked to Guinn but "my attitude is it should be tapped only in an 'absolute necessity.' "
He said the Legislature in February will have Guinn's budget and any proposal for an increase in taxes. Lawmakers than can look to see if it is necessary, said Raggio, who is chairman of the Senate Finance Committee.
Sen. Bob Coffin, D-Las Vegas, said he asked Guinn four months ago to start the process to dip into the fund. And he asked Guinn to put the issue on the special session of the Legislature that just concluded.
There was an "amicable disagreement," said Coffin, also a member of the Finance Committee. He had a bill drawn up to allow the governor to draw money from the fund so that many agency budgets would not be cut.
When the issue of putting $12 million more into the state employees health insurance fund came up at the special session, Coffin also suggested the governor be allowed to use the "rainy day" fund.
Senate Minority Leader Dina Titus, D-Las Vegas, said she supported dipping into the fund.
"I've always felt we should tuck some money away for emergency," she said.
But she said it should not be an excessive amount. She said the need to draw from the fund shows "the need to look at the whole revenue picture."
Guinn is waiting for the final figures on how much state agencies returned to the treasury on their last fiscal year budgets. The state is required to have a $91 million general fund balance or enough money in the bank to run the state for a period of time in an emergency.
Comeaux said some cuts were made in last fiscal year's budget but more will have to be made to make sure there is the required $91 million balance. He said he expects the governor to make those decisions in the next few weeks.
The governor has put a freeze on hiring new workers, except in special circumstances.
Collections from gaming and sales tax are coming in lower than predicted. Those comprise more than 70 percent of the state's general fund.
The budget hole grew $9 million deeper during the special legislative session. The Legislature and Guinn approved a plan to save the health insurance program for state workers. State employees faced average increases in their premiums by 21 percent or loss of some major benefits such as vision and dental coverage.
Comeaux said adding the $9 million to the deficit is not a major problem in light of the estimated $165 million shortfall.
Guinn said he intends to present two budgets to the 2003 Legislature. One will allow for a two-year spending program based on the slower growth of revenue. The other budget would include revenues from suggested tax increases.
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