A state fund used to grant compensation to victims of crime is at risk of being insolvent during the upcoming two-year budget period if additional money is not added to address a dwindling pot of federal dollars.

That would leave the state unable to issue payments to crime victims that are typically used to handle emergency needs such as funeral expenses, relocation costs and emergency therapy.

State officials found out in late March — after an initial budget hearing on the fund — that the account’s federal funding would be significantly reduced from $2.3 million last fiscal year to $1 million in upcoming years. Funding for crime victim assistance is generally supported at the state and federal level by criminal fines, restitution fees and court assessment fees, but federal financial support for the program decreased in the late 2010s amid declining collections from those sources and caps on appropriations from the assistance fund to ensure stability and reduce the effects of fluctuating deposits into the fund.

“In the close of fiscal year 2017, the program had about $12 million in reserves, and we've been expanding those down to where we find ourselves in the second year of the biennium being insolvent,” Melanie Young, a deputy administrator for the Division of Child and Family Services, told lawmakers during a Tuesday budget meeting. “We've learned that the federal dollars that are coming into this program are being reduced further.”

The shortfall would leave the state unable to fund compensation claims for crime victims, legislative fiscal staff told lawmakers, adding that it could even mean the state is unable to qualify for additional federal funding used to support victims.

During the current two-year budget period, federal funding totaling $4.5 million makes up nearly one-fifth of funding in the state’s victims of crime account. During that period, the fund has paid out more than $11 million to victims, even drawing on reserve funds and relief dollars from the federal American Rescue Plan to support payments not originally allocated for in the 2021 legislative session. Young told lawmakers last month that in the 2022 fiscal year, the program received 4,000 claims for assistance.

Amy Stephenson, director of the Governor’s Finance Office, said the administration is working on legislation to replace funding for the account (currently supported by court assessment fees) with general budget funds and allow for the state to “address the shortfall in the interim” after the session ends.

But Democratic lawmakers took issue with the funding amounts, targeting the governor’s office for not bringing forward a budget amendment this session to address the shortfall. In a statement released after the meeting, Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) said “shortchanging funds for victims of crime is unacceptable” and that Democratic lawmakers plan to “act to fix this budget gap to ensure sufficient funds are available to support crime victims across the state.”

The governor’s office declined to comment.

Young said that with the shortfall, “the only option the state would have would be to amend the state plan to eliminate payments to the victims.”

Assemblyman Howard Watts (D-Las Vegas) described that option as “unacceptable.”

Increased federal funds could also support the program in the long term. In 2021, President Joe Biden signed into law the VOCA Fix Act, a reference to sustaining support for the Victims of Crime Act Fund, which has provided federal support to state and local programs that assist victims since 1984.

Still, lawmakers agreed the shortfall needed to be addressed as soon as possible. The subcommittees that discussed the issue Tuesday directed staff to bring forward proposals during an upcoming Saturday legislative budget meeting to address the shortfall, likely using unexpended funding from the federal American Rescue Plan.