Even before the federal government decided to throw roughly $4.5 billion federal dollars Nevada’s way as part of a COVID relief package, state government had been spared most of the pain from the last year of arbitrary and devastating coronavirus restrictions.
While Nevada workers suffer from some of the worst unemployment rates in the nation (Las Vegas has stubbornly rated as the hardest hit region) and businesses collapse under the weight of ongoing heavy-handed “emergency” regulations, government coffers have been, apparently, humming along just fine.
This was evident by Governor Sisolak’s proposed budget at the beginning of the legislative session—a budget that cut a mere 2 percent from the previous biennium in real dollars. In fact, the governor even managed to balance his proposed budget with no new taxes, while simultaneously repealing the comically anemic “cuts” made during the worst days of the coronavirus shutdown—such as a one-day-per-month furlough for government workers.
Nonetheless, government’s special interests have spent this legislative session crying poverty as a justification for increasing the tax burden. The special session last year saw the introduction of proposals aimed at hiking taxes on mining, the Clark County Education Association introduced a proposal this year to hike sales taxes to the highest average rate in the nation, and lawmakers have even discussed toying with property-tax caps in an effort to create more “revenue” for local and state government.
However, the fact that Washington D.C. has shoveled trucks full of federal tax dollars to state and local governments should put such narratives to rest. Far from having a budget crisis, Nevada government is actually poised for a windfall—an increase greater than what was expected for the state even before the governor’s COVID protocols robbed the Silver State of its robust economic expansion.
Federal stimulus dollars will actually increase state revenues by $2.7 billion—about 30 percent over the last biennium! (How many small business owners or blue-collar workers can boast about similar budget increases after a year of shutdowns, restrictions and executive decrees?)
Gov. Sisolak’s proposed budget asked for General Fund expenditures to be set at $8.7 billion—a mere $187 million less than pre-pandemic spending levels. However, state government is poised to receive a whopping $2.9 billion from the federal stimulus package, resulting in a massive increase in revenue at a time when most Nevadans are operating on tighter budgets and fewer economic opportunities.
Education alone—one of the political class’ preferred excuses for hiking taxes and spending—will see an increase in K-12 funding of roughly $923 million! That’s a drastic reversal of fortune for a government system that, under Sisolak’s proposed COVID budget, would have faced $156 million in cuts.
Of course, government often uses its own arithmetic when justifying its preferred spending priorities—making the modest cuts appear much larger than they actually are. That’s because government accountants like to define a “cut” as any amount less than the increase they had initially expected. So, if a government agency expected a $10 million increase and only received an extra $7 million, government economists would describe the difference as a “cut” of $3 million.
Even using this form of budget terminology, the state of Nevada is coming out on top with the infusion of cash from the feds. Originally, before the events of 2020 turned the world on its head, expectations were that the 21-23 budget would be $9.7 billion. Assuming the legislature approves something similar to Gov. Sisolak’s proposed $8.7 billion budget, federal stimulus dollars will balloon that amount to $11.6 billion—an increase of almost $2 billion, regardless of what budget gimmickry one might try to employ.
And while the exact plan for spending this windfall has not yet been hashed out (lawmakers might consider a special session to deal with such formalities), it’s clear that government at virtually every level could see their revenue streams made whole in the next biennium—something most ordinary Nevadans are less likely to experience in their own financial futures.
Raising taxes on workers and business owners who are trying to rebuild after a major economic crisis is never a good policy idea… Doing so at a time when government itself is flush, however, would be a stunningly brazen display of contempt for the ordinary Nevadans who have seen their livelihoods decimated by the last year of arbitrary and capricious “emergency” regulations.
