CARSON CITY, Nev. (AP) - Members of the Legislature’s Interim Finance Committee will consider Gov. Steve Sisolak’s proposal to cut more than $600 million from the budget to make up for lost tax revenue caused by the coronavirus pandemic.
Few states have been hit as hard by the downturn as Nevada, which relies heavily on tax revenue from the gaming and hospitality industries to underwrite its state budget.
“The State is making difficult budgetary decisions at this time that are necessary to end Fiscal Year 2020 with a balanced budget following the unexpected impact of a world-wide pandemic,” Sisolak said in a press release announcing the proposal.
As casinos emptied and tourists cancelled trips, the unemployment rate soared from 3.6% to a nation-topping 28.2% from February to April as tax revenue plummeted.
Even though tourists are now trickling back, the governor’s finance office estimates the state will bring in substantially less revenue in the current budget year than it projected in May 2019.
After projecting it would collect $1.3 billion in sales tax, state officials now expect to end the fiscal year with $1.1 billion. They expect live entertainment tax revenue will fall from $192 million to $92 million and gaming tax revenue to fall from $781 million to $620 million.
The state expects the total shortfall will be $812 million in the budget year that ends June 30.
To shore up the $4.4 billion annual budget, Sisolak asked all state agencies to prepare 4% cuts, furlough employees one day a month and implement salary freezes. Nevada also drew $401 million from the state rainy day fund.
Sisolak’s proposal would reduce funding by $265 million for K-12 schools, which routinely rank among the worst in the United States. It would slash an additional $67 million from state agency budgets and an additional $49 million in one-time earmarks, including $25 million allocated for a new buidling at UNLV’s medical school.
Amid the pandemic, the proposal would cut $19 million from the Department of Health and Human Services. It has received $9.8 billion from federal coronavirus legislation.
Even with the proposed cuts, Nevada will still have to make up almost $200 million to break even in the budget year that ends in June.
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Sam Metz is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on under-covered issues.
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