EDITORIAL: Stay away from the Rainy Day Fund

It may not be as sunny as legislators had hoped, but it’s far from a rainy day.

As the legislative session winds down, passing a balanced budget is the biggest job facing Republican Gov. Joe Lombardo and the Democrats who run both legislative chambers. Unlike representatives in the federal government, Nevada politicians can’t issue debt to plug their budget holes. This is a very good mandate. But many elected officials still have the impulse to avoid the hard work of trimming waste and prioritizing spending.

On May 1, Nevada’s Economic Forum, which is charged with making binding revenue projections for the governor and the Legislature, revealed its numbers for the upcoming two-year budget cycle. Compared to the panel’s projections from December 2024, Nevada’s expected general fund tax collections declined by $191 million. Projected funding for the State Education Fund has also fallen by around $160 million. Combined, that’s a shortfall of $350 million.

Sure enough, Assembly Ways and Means Committee Chair Daniele Monroe-Moreno, D-North Las Vegas, recently introduced Assembly Bill 587. It would transfer $350 million from Nevada’s Rainy Day Account to the general fund.

“I felt I needed a vehicle,” she said about the bill. “If I have to make the decision as fiscal leader to move money from the Rainy Day Fund, that vehicle would be there.”

That may seem like a logical solution — until you take a closer look at the numbers.

The most important thing to understand is that Nevada’s general fund didn’t lose $191 million in revenue. Tax receipts simply aren’t predicted to increase as quickly as previously expected. In December, members of the Economic Forum projected Nevada would collect $12.6 billion in fiscal years 2026-27. Now, they believe Nevada will bring in $12.4 billion over that time. In fiscal years 2024-25, Nevada is projected to take in $12.1 billion in revenue.

So Nevada’s general fund revenue is still expected to increase by 2.3 percent. That’s not a large amount, but it is no “cut.”

But wait. After the 2023 legislative session, the Economic Forum predicted Nevada would collect $11.7 billion in revenue. If you use that as a baseline, Nevada’s revenues are up 6 percent. That’s a healthy increase — and there should be an extra $400 million in revenue over previous projections.

A 6 percent increase in revenues isn’t a rainy day. Tapping Nevada’s savings account in this situation would be irresponsible and create a structural deficit that would lay the groundwork for future tax increases.

It won’t make many lobbyists happy, but legislators need to reduce spending, instead of raiding Nevada’s emergency fund.