Gov. Brian Sandoval, inaugurated just three weeks ago today, delivers his first State of the State speech to Nevada’s Legislature tonight. We can expect to hear by-now-familiar themes, including that of “shared sacrifice,” and, of course, “no new taxes.”
Sandoval’s message will be one of harsh economic reality: The recession’s impact on Nevada (due, in part, to the state’s antiquated tax structure) leaves us unable to do anything but cut the budget. He’ll say that to increase taxes now would be irresponsible, threaten any hope of recovery, and further drive up joblessness, already at an all-time high of 14.5 percent statewide and 14.9 percent in Las Vegas.
That Sandoval is not backing off his campaign-trail pledge on new or increased taxes and fees will cheer conservative Republicans, but it also paints an interesting dynamic for the upcoming Legislature.
Currently, the Economic Forum has told Sandoval the state has about $5.3 billion to spend in its general fund. That’s about $1.1 billion less than is in the current budget, which itself was cut by lawmakers as the recession persisted. If the general fund were to grow in order to accommodate new Medicaid patients, new schoolkids, people needing social services and eliminate furloughs for state workers, the budget by rights would approach $8 billion.
Obviously, Nevada won’t raise taxes $2.7 billion. But a budget of $5.3 billion isn’t acceptable to Democrats. So they will seek to raise some taxes, perhaps to at least keep pace with the existing budget. (That would still require $1 billion in new or increased taxes, which if approved would be the largest tax increase in state history.) But Democrats could argue that’s a fair compromise: The state is neither adding programs or padding its budget, but nor is it falling farther behind.
When the Democratic response is offered by Assembly Speaker John Oceguera tonight, you’ll likely hear a fairly conservative line: The state can’t tax or cut its way out of the recession, but it cannot afford the impact of what Sandoval’s budget proposes. Everybody — from public employees to those receiving government services — will have to accept some cuts, but they cannot be as deep as Sandoval wants.
If things go that way, the endgame of the 2011 session is foreshadowed tonight: A coalition of Democrats and a few Republicans (at least three in the state Senate and two in the Assembly) passing a budget that includes taxes over Sandoval’s eventual veto, an override vote and a budget that almost everybody in Carson City will agree is inadequate for what the state needs to do.
You can watch all the action live (with commentary and analysis by yours truly) on 8NewsNow tonight starting at 6 p.m. Also, for breaking news and instant analysis of the speech, you can follow me on Twitter.