When the state budget crisis is over, there will be a big taxpayer bill for rebuilding and retraining in government
“We’ve rebuilt this agency twice since I’ve been here,” said the state worker. “I’m told it happened once before I got here. And, of course, we’ll have to do it after this recession.”
She doesn’t want her name used—fear among public employees is high since Jim Gibbons became governor—but she is tired of the cycle of boom and bust in state government. She’s especially concerned because she knows what is coming—trying to put back together an agency that a year ago had a good handle on its mission and also had the expertise to do the job. And she knows her agency will never regain the momentum it had.
All over the state, and not just in state government, agencies are coping with reduced budgets, layoffs, attrition and all the other problems that accompany hard times. For just one example, consider Elko County. There, locals feel that for once they got more than the back of the legislature’s hand, and now it’s all going away.
After investing millions to upgrade its airport, Elko lost half a million dollars provided by the Nevada Legislature to help the burgeoning community attract an air carrier for an Elko/Reno route (right now, all routes go through Salt Lake). The hard-pressed local Division of Child and Family Services office has lost additional staff members that had been promised. Harbor House, the shelter program run by the Elko Committee Against Domestic Violence, has lost thousands in funding. Law enforcement expects to lose anti-meth money and the drug treatment center Vitality Center has lost funding.
“The funny thing is, we in the rurals have gone without for so long we might not notice any impact from the recession,” says Elko Daily Free Press associate editor Doug McMurdo. “You can’t miss what you never had.”
Nevertheless, with the exception of the airport funds, most of these dollars are going away at exactly the time when the need for them is rising. Social problems always explode when times are hard. And when the recession is over, after anti-drug and drug treatment money have both been cut, the drug problem will be worse than ever. The community will have lost years in its anti-drug efforts.
The same kind of thing is happening in county after county, in agency after agency. When the recession is over, the legislature will tackle the job of rebuilding these programs, spending money for recruiting and retraining, having lost years of institutional memory and expertise.
Since 1981, when the state shifted from reliance on property taxes to sales taxes, the state has experienced four major budget crises, not counting the current one, giving state lawmakers plenty of object lessons in the need to reform the state’s fiscal structure to make it more stable and predictable.
In effect, Nevada government since 1981 has been living in a sort of modified form of zero-based budgeting, one that strikes every 10 years or so. Programs are cut back to bare bones, then must be rebuilt, and rebuilding is costly.
During the 1991-92 recession, Gov. Robert Miller cut mental health programs that had taken years to build. The cuts were accompanied by tragedies—including an arson fire at a Reno clinic—that prompted mental health activists to accuse Miller of insensitivity to the needs of the mentally ill.
After Miller left office, Gov. Kenny Guinn was able to rebuild the mental health program at great expense. The momentum it has had is now in danger of being lost.
Paradoxically, given their distaste for the governor, few state workers blame Gibbons for the state’s roller coaster fiscal system.
“This was happening to Nevada before Jim Gibbons was even in the legislature,” said one agency chief. “He wasn’t on Assembly committees that dealt with this, I don’t think. He’s probably taking pleasure in cutting the programs back, but that’s to be expected. It’s the legislators who keep letting this happen.”
Frequently, the programs damaged most are the ones needed the most in hard times. Richard Bryan, who served as governor from 1983 to 1989, had charge of one of the rebuilding and retraining cycles, at a time when the state had little money left after the ‘81-82 recession ended. In his first message to the legislature, he described the problem complicating the job of government: “We have heard that in hard times, business tightens its belt. Government, we are told, should do the same. It is an appealing argument, and indeed when times are tough, government should cut expenses. Government cannot, however, avoid its responsibilities. When times are tough, business loses customers. When times are hard, government gains customers, and they are customers who cannot take their business elsewhere!”
Bryan says now that not only does the public not understand that a stable and well built tax structure saves taxpayers money by helping government ride out hard times better and eliminating retraining costs, but neither do most state legislators.
“The legislators are between a rock and a hard spot, much like the governor is—in other words, ‘What the hell do we do?’ … You know, nobody’s thinking along those lines. I think you’re just thinking, ‘My God, we’ll just cut as little as possible, that things [will] turn around, then maybe we can supplement these budgets out of the contingency fund’ … and get through to the next legislative session when, you know, the economy has recovered.”
The anti-government crusaders’ solution: Don’t rebuild them. That makes for colorful rhetoric but contributes nothing to solutions because in most cases that’s simply not going to happen. From prenatal care to closing abandoned mine shafts, from road building to destroying invasive plant species, government programs will rebuild because the public wouldn’t tolerate the alternative, and legislators know it.
Nevada Taxpayers Association director Carole Vilardo says state tax structures, as well as the practices of businesses, frequently lag behind the way economies change. Nevada’s economy is still tied to taxation of durable goods, and it is barred by federal law from extending the sales tax to Nevadans’ internet purchases.
“Should you be evaluating your tax structure periodically? Absolutely,” says Vilardo. “You should be evaluating it to make sure that it still fits your economy and that business is still doing business in such a way that it’s reflecting the economy.”
The Taxpayers Association is one of the few groups that has looked at ways for the state to cope with the problem of the roller coaster cycle in Nevada. Nevada governors make their two-year budget recommendations in January and the Nevada Economic Forum’s final predictions of how much money there will be during the upcoming two years don’t arrive until May. In 2005, the Taxpayers group recommended that in years when the Forum’s projections are higher than the governor’s, the difference “be restricted to non-ongoing expenses and… prioritized to be used for employee training, establishing or adding to a rainy day fund or establishing or adding to a capital replacement/improvement fund, or … one shots not impacting future budget needs.”