New bill would make permanent emergency provisions to pay state debt

New bill would make permanent emergency provisions to pay state debt
The Nevada Legislature on second day of the 31st Special Session in Carson City, Nev., on Thursday, July 9, 2020. (David Calvert/The Nevada Independent)

By Jeri Davis, This Is Reno

In response to the financial impacts of the COVID-19 pandemic, during the 31st Special Session last summer, the Nevada Legislature passed Senate Bill 4. It allows the State Board of Finance to issue a line of credit, note or bond if the state is unable to pay its bills during interim periods when the legislature is not in session.

The provisions of SB 4 are set to expire on June 30, 2021. Senate Bill 47 in the current session seeks to make the bill’s provisions permanent.

SB 47 slightly modifies the process, according to State Treasurer Zach Conine, to “ensure greater checks and balances.”

In a presentation to legislators, Conine included an overview of the provisions of SB 47, saying the bill “puts a permanent tool in Nevada’s toolbox to address financial crises, whether caused by severe economic downturn, public health emergencies, or other extreme extenuating circumstances in which the State is unable to pay its bills.”

Nevada is one of only four states with a biennial budget process. The others are Montana, North Dakota, and Texas. The biennial process makes it challenging to respond to evolving economic conditions.

SB 47 would provide the state with more flexibility to ensure that general fund appropriations made by the Legislature can be fulfilled in the event of an economic downturn without taking significant losses in its investment portfolio.

The bill would permit the State Board of Finance to issue not more than $150 million in interim bonds or loans through a series of steps. The State Treasurer would first have to determine that the balance in the state’s General Fund is insufficient to meet upcoming obligations. 

Once that determination was made, the treasurer would notify the legislature’s Interim Finance Committee of how much money was needed and make a request for the State Board of Finance to issue that amount in funds.

The Interim Finance Committee would have 15 days to consider the request and deliver a resolution establishing the maximum amount that may be issued. When the bill was introduced, its language stated that if the Interim Finance Committee didn’t approve or deny the request within 15 days, it would be automatically approved. This language was amended such that requests would be automatically denied if the Interim Finance Committee didn’t act on it.

SB 4 passed unanimously in both the Senate and Assembly during the special session. SB 47 is not receiving as much support. When the Senate voted on it during its April 6 floor session, seven senators voted against, including Democrat Senator Dina Neal.

Neal said the amendment to the bill improved it but that she still could not support it, saying it is more than a “tool in the toolbox” and that she felt it gave away too much power that normally rests with the entire legislature. SB 4, she said, was intended to be a temporary, emergency measure.

“I don’t take this vote lightly,” she said. “Not every emergency is not the same, nor will it require the same tools. I will not give away power that I believe rests with the entire legislature and that rests with the … decision-making body of 63 elected persons. The power to pay a debt and the manner is very great, and it is a legislative power.”

Neal was joined in her opposition to SB 47 by six Republican senators: Carrie Buck, Scott Hammond, Ira Hansen, Keith Pickard, Heidi Seevers Gansert and James Settelmeyer.

The bill must now be passed by the Assembly before making its way to Gov. Steve Sisolak’s desk.