Nevada could receive up to $3.9 billion as part of the state and local aid package inside the proposed $1.9 trillion federal aid bill currently pending before Congress, a potential massive reversal of fortune for pandemic-battered state and local budgets.
Estimates published by the House Committee on Oversight earlier this week indicate that Nevada could be in line to receive $3.915 billion from the federal government through the $350 billion funding mechanism for states, localities, tribes and territories. Total estimated aid would equal about $2.97 billion for the state, and around $0.95 billion for local governments.
The state’s entire annual general fund budget is about $4.3 billion.
According to a one-page description of the measure published by the House committee, the federal funds would be subject to “eligible uses including to replace revenue lost, delayed, or decreased as a result of the pandemic.” The plan is far from final — members of Congress recently voted to authorize committees to start digging into the details of the proposal.
The projected totals are just part of the proposal, and could change or shrink as congressional Democrats move the massive stimulus package through the budget reconciliation process.
But the massive allotment for Nevada would roughly quadruple the amount that state and local governments in Nevada received from the $2 trillion CARES Act. One concern is that as a one-time infusion, the state would need to be able to administer a large amount of money in a short period of time but could not sustain those expenditures on its own when federal support goes away.
“We could easily fix most of the problems in Governor Sisolak's budget with $500 million,” said Sen. Ben Kieckhefer (R-Reno). “If the federal government is going to send us billions of dollars to fix a $500 million problem, we are going to have to be very disciplined to ensure we don't get too far out over our skis and put the state in a precarious fiscal position in years to come.”
Thanks to better-than-expected tax revenues and optimism over the COVID-19 vaccines, Gov. Steve Sisolak’s proposed $8.68 billion budget for the next two fiscal years called for a roughly 2 percent budget cut over the prior two-year budget cycle. Sisolak and his staff urged patience in the budget process, and said the state’s financial situation (or additional federal stimulus) could change over the coming months.
His office said in a statement Friday that Sisolak was "pleased" that flexible aid was in the proposal and could bring "much needed assistance and relief."
"Additional money for State and local governments has been a consistent request from Governor Sisolak and from governors and local leaders across the country since the start of the COVID-19 pandemic," the statement said. "The Governor and state leaders are monitoring the progress of the bill closely - including what parameters may be put around the money - and if the legislation is passed, the State will bring forward a plan to allocate the funds in-line with the bill’s requirements."
Assemblywoman Maggie Carlton (D-Las Vegas) said in a text message that she was “happy to see progress being made on a rescue package,” and that any received federal dollars would be prioritized in the areas of health care, mental health and education.
“Of course, we need to see what ultimately passes at the federal level and what Nevada's share is, but I am thrilled with any assistance we receive from the federal government,” she wrote in a text message. “Nevada was one of the states hit hardest by the COVID-19 pandemic and our families and small businesses are still suffering. Any federal aid would be prioritized for helping get Nevadans back on their feet.”
Nevada has used federal aid to extend grants to small businesses, offer rental assistance, support suicide prevention activities and help schools close the digital divide. But somewhat more controversially, lawmakers went on a last-minute spending blitz to allocate dollars before a deadline, putting $81.6 million toward correctional officer salaries and $25 million toward Nevada Highway Patrol salaries that otherwise still would have been paid — but with general fund dollars.
Some expenditures by local governments have been subject to criticism, too, including the City of Las Vegas’ decision to spend nearly all of its $119 million allocation to cover payroll. Emergency shelters in Southern Nevada for the homeless have also proved costly — a temporary ISO-Q facility in Las Vegas never had more than 13 percent capacity and spending totaled nearly $3,800 per person, per night they stayed.
Payments to state and local governments have been eyed with suspicion by some Republicans, who say they would amount to “blue state bailouts” that support public employee pension funds with borrowing that deepens the deficit.
“I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” Senate Minority Leader Mitch McConnell (R-Kentucky) said in an interview with the conservative radio host Hugh Hewitt in April. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
The estimated federal aid dollars would also provide a windfall to county and city governments around the state. Clark County would be projected to receive $444 million in federal aid payments, and Washoe County would receive $92 million.
Federal dollars would also flow to cities — $120 million for the City of Las Vegas, $50 million for Reno, $43 million for North Las Vegas and $34 million for Henderson, according to the projections.
Updated at 12:30 p.m. on Feb. 12, 2021 to add comment from Gov. Steve Sisolak.