Tuesday, July 01, 2003

Deadlock! Stalemate! Huzzah!

For the first time since 1867, the Nevada Legislature has failed to start a new fiscal year with a balanced budget. Fifteen Assembly Republicans held firm, denying (by a one-vote margin) Gov. Kenny Guinn and the bipartisan Carson City establishment the record-setting $1 billion-plus tax increase they demanded.

Guinn has now asked the state Supreme Court to intervene, but where that will lead is anyone's guess. Last week, the governor showed his tenuous connection with the knowledge of how government actually works -- separation of powers and such -- by suggesting that the justices might unilaterally impose a tax plan. (Talk about your high court!) There's also the theory that the court could force the Legislature to stay in session until the budget is balanced, but with the constitutional necessity of getting a two-thirds majority for any tax increase, it's not exactly clear how the justices could coerce reluctant lawmakers to vote against their will.

The most likely (and least constitutionally suspect) resolution for the immediate impasse would be for the justices to allow state funding for government departments, including school districts, to resume at the level anticipated by the Economic Forum, the group that handles revenue forecasting. (This would mean that government spending would immediately increase by 11 percent.) The state is continuing to collect taxes, after all.

Such an outcome would be disastrous for Guinn and the establishment, who seek a 33 percent spending hike (as oppposed to the Assembly Republican anarchists who are wiling to stomach a 30 percent rise). If the court mandated this outcome, the sky would not be falling. Government departments would continue to operate. The average Nevadan who's not a member of a public employee union would barely be inconvenienced. Stay tuned.


Meanwhile, in the rest of the country ...

State governments will cumulatively reduce spending by 0.1 percent, according to the National Governors Association.

Money quote:

The latest Fiscal Survey of the States indicates the combination of plunging revenues and the explosion in health care costs have forced states to make major spending reductions for the last three years. These spending cuts are the largest in the 27-year history of the Fiscal Survey. Actual state spending growth was up only 1.3 percent and 0.3 percent in 2002 and 2003 respectively, and is expected to be down 0.1 percent in 2004. It also forced states to increase revenues by $8.3 billion in 2003 and governors are proposing revenue increases of $17.5 billion in 2004. End-of-year balances also declined to 0.3 percent of spending in 2003.

And Kenny Guinn wants Nevada spending to increase by one-third over the biennium. California, here we come, indeed.


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