State drains rainy day fund to deal with coronavirus

CARSON CITY — After sitting empty for the better part of a decade after the Great Recession, Nevada’s rainy day fund had finally begun to reach healthy levels in recent years.

But because of the economic fallout created by the coronavirus pandemic, all of that progress in bolstering the state’s savings account has been wiped out.

The Legislature’s Interim Finance Committee on Monday approved the transfer of all $401 million in the state’s rainy day fund to the state’s general fund to help offset the financial crisis caused by the coronavirus that has closed the state’s lifeblood industries for the past two months. The state’s Board of Examiners approved the transfer last week.

The vote passed on a party lines, with Democrats in favor and Republicans against.

The transfer of the funds follows declarations of a fiscal emergency last week, first by the governor and then by the legislative committee. The state estimates its revenue shortfall for the fiscal year that ends June 30 is $741 million to $911 million stemming from the COVID-19 economic shutdown.

Republican lawmakers who voiced their concerns against transferring the full contents of the rainy day account called for more oversight and said they would have supported transferring a portion of the funds.

“We need to know what the plan is before we start moving money around,” Assemblyman Jim Wheeler, R-Minden, said.

But splitting the funds across multiple transfers would only delay the inevitable, committee chair Assemblywoman Maggie Carlton, D-Las Vegas, said.

“We know we’re going to need it,” Carlton said. “Splitting it in two doesn’t serve any purpose other than to slow it down.”

Some, including Sen. Pete Goicoechea, R-Eureka, also suggested using the state’s portion of the $1.25 billion in federal coronavirus relief dollars, or about $800 million, to make payments due by the end of the month.

Assembly Speaker Jason Frierson, D-Las Vegas, said the money was put into the rainy day fund for this type of situation.

“For somebody living month to month, they don’t go get a payday loan when they have money in their savings account,” Frierson said.

The committee is set to meet again Thursday, when they could vote to create a subcommittee that would oversee and make recommendations on how to use the coronavirus federal relief funds.

Contact Capital Bureau Chief Colton Lochhead at clochhead@reviewjournal.com. Follow @ColtonLochhead on Twitter.