Lt. Gov. Brian Krolicki is resurrecting an idea to help plug the budget gap which made a lot of sense several years ago in another context, but is absolutely the wrong thing to do today.
The idea is to “sell” the tobacco settlement money to Wall Street investors for a one-time lump sum. When Krolicki originally proposed this idea - under the legitimate assumption that the tobacco money might not always be there - the lump sum could have been put into a kind of savings account and the programs being funded by the tobacco money, including the Guinn Millennium Scholarships, would be funded in perpetuity by the interest earned on the money.
Alas, that’s not what the LG is proposing to do with the proceeds of such a sale today. Instead of taking the lump sum of money and putting it into a savings account, the Krolicki Plan would take that money to cover today’s budget shortfall instead of cutting non-essential government programs and laying off non-essential and unproductive government workers.
And as state Sen. Bob Beers (R-Las Vegas) pointed out earlier this week on Dave Berns’ “State of Nevada” radio program, the proceeds from the sale would be a one-time lump sum which won’t cover ongoing government operations once the lump sum is spent. So it would only be a matter of time before we’re all right back where we started from.
Elected officials are going to GREAT lengths to do anything and everything to avoid layoffs or cuts in government programs or departments. Unfortunately, those great lengths are doing nothing more than kicking the can down the road. It’s time for them to suck it up and make the tough spending decisions. “Gimmicks” such as draining the Rainy Day Fund and selling the tobacco money are only postponing the inevitable and will likely make future cuts even MORE painful.
Or a tax increase inevitable.
Posted on June 26th, 2008 by Chuck Muth
Filed under: Nevada
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