Sandoval’s savings, revenue still won’t cover Legislature’s budget

CARSON CITY — Republican Gov. Brian Sandoval detailed another $130 million in savings and new revenue Tuesday that is available to offset major cuts to education and social services in Nevada.

But the amount is far less than Democrats who control the Legislature say is needed to produce a 2011-13 general fund budget they are willing to vote for.

The new money comes from about $60 million in Medicaid and other health and human services savings plus another $72 million in tax revenue that came in ahead of projections.

Sandoval proposes directing about $49 million of the savings to programs for the mentally ill, disabled and poor who critics say would bear the brunt of cuts in his proposed $5.8 billion budget that is subject to his campaign promise to oppose any tax or fee increases.

Sandoval wants to send the $72 million in new revenue to public education, which Democrats say needs about another $1.2 billion to be funded adequately.

Sandoval Chief of Staff Heidi Gansert said the savings and new revenue ahead of projections demonstrate the governor was conservative with earlier estimates and with the add-backs is showing he listened to concerns from lawmakers.

"We are fortunate to be able to get some dollars to these important programs, Gansert said.

Tens of millions of more dollars could be added to the debate next week when the state’s Economic Forum meets. The panel is charged with making official projections lawmakers and the governor use to build budgets.

The $72 million in new revenue identified Tuesday came from projections from the forum’s technical advisory committee, which makes projections in minor revenue categories. The projections coming May 2 will cover major revenue categories such as sales, gambling and insurance premium taxes.

Assemblywoman Debbie Smith, D-Sparks, was upset the technical advisory numbers came out ahead of the broader Economic Forum meeting.

"This sort of undermines the integrity of the Economic Forum," Smith said.

Other Democrats said the money is a drop in the bucket compared to the needs they say the state budget should address.

"We should add that back, but it doesn’t change the fact we have a $1.2 billion hole in education funding," said Assembly Speaker John Oceguera, D-Las Vegas.

Senate Majority Leader Steven Horsford, D-Las Vegas, was more blunt, accusing Sandoval of using the savings money to create an add-back list aimed at appeasing Republican lawmakers who might otherwise be inclined to vote for a tax increase.

"The Governor is trying to cut deals to get votes. Instead he should reach out to everyone who is going to feel the consequences of his budget," Horsford said in a written statement.

Oceguera said Democrats intend to "close" education budgets at funding levels they feel are adequate, and then move on to a conversation about raising the money to pay for it. New money presumably would need to come from tax increases opposed by Sandoval and legislative Republicans, who have enough votes to block new taxes but not enough to move Sandoval’s budget.

"The budgets are in our hands now, so we’ll close those budgets as we see fit," Oceguera said.

Much of the $60 million in savings came from changes in the federal matching rate for Medicaid clients and by eliminating fraud, waste and abuse. Mike Willden, director of the Nevada Department of Health and Human Services, said an unspecified amount of the savings came from identifying fraudulent billing by two companies providing behavioral health services to children.

"We had a significant fraud, waste and abuse effort," Willden said.

He didn’t identify the companies, saying only that one was in Northern Nevada and the other was in Southern Nevada. According to Willden, the department identified areas in which the companies were inflating bills for state sponsored services.

Other savings came from the increase in federal matching rate for Medicaid clients, he said. The increased match was the result of falling income levels for Nevadans due to the recession.

Of the $60 million in savings, $49 million was broken up into "add-backs" for programs that have been cut, $7 million was eaten up by another revision, and another $4.3 million remains up for grabs.