EDITORIAL: Sisolak right to seek budget reductions from state agencies, schools

Businesses and families aren’t the only ones facing steep budget cuts. The shutdown of Nevada’s economy has sent tax revenues plummeting for the state and local governments.

Earlier this month with the coronavirus crisis raging, Gov. Steve Sisolak directed state agencies to come up with 4 percent cuts for the current fiscal year — which ends June 30 — and between 6 to 14 percent reductions for next year. The economic shutdown has decimated the casino industry and other businesses in a state that generates about two-thirds of its revenue from gaming and sales taxes.

“We are headed into a new reality and need to take a different direction with our state budget that reflects this reality,” Gov. Sisolak wrote in a letter to state agency leaders. “One does not have to be a statistician or budget analyst to know that government budgets are taking significant hits as actual revenue will not meet our previous projected revenue expectations.”

This is a prudent step. Gov. Sisolak and legislative leaders need to know what their options are when it comes to reducing expenditures. A 14 percent reduction may be optimistic. Even if Mr. Sisolak clears some Nevada businesses to open by May 1, it will take time before many Nevadans will resume their pre-virus consumer habits. Meanwhile, the gaming industry will likely face challenges for months as tourists take a more cautious approach to travel.

In the medium-term, there are reasons for confidence. Las Vegas is the entertainment capital of the world. Our accommodations, culinary hot spots, shows and gaming options are the world’s best. The opening of Allegiant Stadium will provide just the boost this town needs to draw fans when the NFL and other leagues resume normal activities.

But that’s not going to make the next few budget cycles any less painful. On Tuesday, the Las Vegas Convention and Visitors Authority eliminated 80 of its 455 full-time employees and put 270 on furlough. The authority also cut 400 temporary positions. Fortunately, the state of Nevada has a more diversified revenue stream than the authority, but this signals the severity of the coming reductions.

At the state level, these spending adjustments should require a special legislative session. Some may argue that the Interim Finance Committee — which makes budget adjustments while lawmakers are out of session — could more easily handle the task. But we’re not talking about around the edges budget tweaks. Having the Legislature convene in special session would avoid constitutional questions involving the authority of interim committees while allowing for more rigorous debate about the proper course.

It’s inevitable that forthcoming state budget cuts are going to be controversial. That’s why it’s important that the governor and lawmakers make those reductions in as transparent a manner as possible.