Las Vegas Sun

July 17, 2019

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Sun editorial:

Budget cuts sound great until their real-life consequences are felt

Donald Trump chainsaws the federal government, and his supporters cheer.

But they may not be so happy when they realize the full effects of Trump’s cuts — particularly the increased funding burden that local and state governments will face when federal services and programs are reduced or eliminated.

Under Trump’s budget plan, that outcome is a stone-cold certainty. The administration readily recognizes it, saying in its proposed 2019 budget that the plan “recognizes a greater role for state and local governments and the private sector to address community and economic development needs and affordable housing production.”

That statement was specifically about cuts to Housing and Urban Development, but it also applies to transportation, environmental protection, job training and other areas.

Fortunately, Trump’s proposed budget merely serves as a blueprint for Congress, which crafts a budget independently of the president. And as was the case in Trump’s first budget plan, Congress restored many of the cuts he suggested.

But Trump went right back at it in his 2019 budget, calling for such reductions as:

• Environmental Protection Agency: 25 percent

• Transportation: 18 percent

• Agriculture: 15 percent

• Interior: 15 percent

• HUD: 14 percent

Those and other cuts have officials in statehouses and city halls nationwide watching Congress nervously. What happens in Washington will affect government budgets across the country, and could very easily lead to increases in property, sales and other taxes levied at the state and local level.

In the Las Vegas Valley, this is an especially tense matter.

As explained in a new report by the Brookings Institution that examined 100 U.S. cities, Southern Nevada has a number of factors stacked against it in trying to absorb costs from federal cuts.

Key among those is the property tax cap that was imposed on local governments by the state during the go-go days before the recession. That cap worked exactly as designed pre-2008, helping protect homeowners from massive tax increases as housing values boomed — but now, it hinders local governments in raising new revenue.

In fact, one analyst told the Nevada Legislature in 2017 that the cap had cost governments as much revenue in the previous two years as was generated from taxes and fees enacted during the 2015 legislative session.

That’s a problem amid federal government cutbacks.

Further, the report indicates, Las Vegas is hindered by the lack of a state income tax, as opposed to cities that receive a diversified stream of tax revenue from property, sales and income taxes.

Another whammy for Las Vegas lies in demand for services.

“Cities with greater rental unaffordability, higher shares of Democratic voters and larger public unions face greater fiscal pressures,” the study says, citing three characteristics that all apply to Las Vegas and, in general, large cities as opposed to mid-sized communities.

That line from the report is especially disturbing considering that Las Vegas finished dead last in recent rankings of U.S. metropolitan areas for providing affordable rental housing to the nation’s poorest families. Worse yet, it was the second straight year that the city was ranked at the bottom, while Nevada has been the last-ranked state for four straight years.

The upshot to all of this: Trump’s cuts amount to a storm on the horizon for cities like Las Vegas.

It’s critical for congressional lawmakers to oppose Trump’s budget and keep our local governments out of harm’s way.