Lawmakers on the state’s Interim Finance Committee unanimously voted Wednesday to declare a fiscal emergency — a step that will allow the panel to access roughly $400 million in the state’s “rainy day” reserve fund and blunt the sharp revenue drops expected from pandemic-related business shutdowns.
Democratic Assemblywoman Maggie Carlton, chair of the committee, said the move was a first for the panel under a new process created last legislative session. It comes after Gov. Steve Sisolak declared a fiscal emergency on Monday on the basis that the state could face a shortfall of between $741 million to $911 million, or about a fifth of the state’s budget for the fiscal year ending June 30.
The declaration came as lawmakers voted to accept a handful of federal coronavirus relief grants and heard updates on an even larger $836 million federal grant the state will receive to support state and local government agencies. State agencies were asked to submit proposed budget cuts to the governor’s office a few weeks ago to absorb the impact of revenue drops, and Republican Sen. Ben Kieckhefer said he wanted an update for a more complete picture of what funds are coming in and what are going out.
“We are working through all of the proposals that were provided by the state agencies to comply with that memo that went out last month,” said Susan Brown, head of the governor’s budget office. “We are still working through those, and there are still some decisions to be made on that.”
Sisolak’s office has so far declined to release the proposals agencies have submitted on where they think they could cut.
Fiscal analyst Russell Guindon of the Legislative Counsel Bureau also said that further detail about the state’s revenue picture is not yet clear. The state is certain that gaming tax revenue — the second largest source for the general fund and one that has been zeroed out since mid-March because of a total shutdown — will fall about $160 million short of projections for the fiscal year.
Information on what other tax revenue sources will come in is less clear and “speculative” right now, Guindon said. Sales tax is the largest source of revenue for Nevada’s general fund.
Lawmakers raised questions about what specifically the large CARES Act grant will support, asking whether it could pay for Chromebooks that support distance learning while schools are out or whether it will promote an expansion of COVID-19 testing and contact tracing. Legislative leaders promised there will be opportunities for feedback and detailed reporting on where the grants go, just as there was with stimulus funds from the Great Recession.
“I want to assure everyone that we are communicating with the governor about how to be inclusive and transparent and allow folks to see exactly where this money is going,” said Assembly Speaker Jason Frierson.
Brown noted that Nevada was getting about $1.25 billion from the CARES Act, including $119 million for the City of Las Vegas, $295 million for Clark County and $117 million for school districts and the Nevada Department of Education.
The remaining $836 million can be used broadly for state and local agencies that are not receiving direct allocations but whose employees are participating in the response to COVID-19.
Members of the IFC also voted to approve a variety of federal grants for coronavirus relief. Among them:
- An additional $442,000 from the CARES Act to support arts organizations struggling amid widespread cancellation of events. Grants of $2,500 to $10,000 will support groups such as theaters and orchestras who need assistance paying rent and paying salaries and operational costs. Republican Assembly members Robin Titus and Glen Leavitt were the only votes against the allocation, and Democratic Assemblywoman Heidi Swank abstained, saying her employer previously received a grant from the Nevada Arts Council.
- About $33 million to the child care subsidy program. More than $24 million will go to help child care providers — many who have been unable to secure assistance from federal loan programs — to weather the financial crisis and loss of clients so they are available when demand picks up. Another $8 million will go to continue child care subsidy payments to families. Republican Assemblywoman Robin Titus was the only vote against the allocation.
- More than $7 million for public safety agencies. The grant money can be used for expenditures such as overtime, personal protective equipment and health care for incarcerated people. Republican Assemblywoman Robin Titus was the only vote against the allocation.
- Nearly $2 million to support mental health initiatives, including creating a “warm line” to provide mental health services to health care professionals who are dealing with increased stress during the COVID-19 pandemic. Funds will also expand capacity for mobile units that respond to families and children in crisis, in hopes of keeping them out of emergency rooms. The vote was unanimous.