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I. State Spending: How Does Nevada Spend Your Tax and Fee Dollars?
1) Health and Social Services and all education accounted for 77% of FY17 state total spending of $12.3 billion.
2) HSS and K-12 spending grew rapidly while all other government spending, the Nevada economy and the wellbeing of Nevadans declined significantly.
3) Most importantly, the burden of state spending on Nevada families and businesses, driven by HSS and education, was 30% higher relative to their incomes in FY17 than in FY06.
II. Nevada State Revenues: Where did the State Get the Money?
Nevada State Revenue Analysis
1) Government grants and contributions accounted for 39% of total state revenues of $13.4 billion in FY17, and they grew much faster than other revenues from FY06 to FY17.
2) Charges for services, grants and contracts for higher education comprise 9% of total state revenues, and they also grew rapidly.
3) Other program revenues amount to 8.4% of total state revenues, and they grew very slowly.
4) In sum, increases in program revenues, driven mainly by HSS and to a lesser extent by higher education receipts grew rapidly while tax revenues grew moderately. In FY06, most state revenues came from taxes.
Nevada State Tax Analysis
1) The burdens on consumption and on persons of state taxes declined in the last decade.
2) To compensate for this decline, the state added new levies and increased taxes mainly on savings, investment and employment and on business.
3) Special note on the commerce tax.
4) The shift in tax burden from consumption to investment and employment and from persons to business diminishes tax neutrality.
5) The shift in tax burden from consumption to investment and employment and from persons to business also diminishes transparency.
6) With ten taxes accounting for 4% to 23% of general revenues in Table 3, and considering their incidence mainly on persons and consumption, Nevada’s tax base can be called reasonably well diversified.
III. Health and Social Services
1) Medicaid is Nevada’s largest single expenditure, and accounts for 64.6% of the health and social services total.
2) The long-term rise in Medicaid spending has been accentuated by a rapid escalation within the past few years due to the expansion of eligibility parameters.
3) Expanded availability of publicly funded health care benefits has occurred alongside a decline in rates of private insurance coverage and other private spending.
4) There is evidence suggesting that expanding Medicaid to additional populations does not improve health outcomes and only further endangers the most vulnerable populations.
5) Whether public or private, most health care plans today are more accurately described as third-party-payer plans than insurance.
IV. Primary, Secondary and Higher Education
1) To improve the effectiveness of its education spending, Nevada must allocate that spending toward programs that have been shown to boost student achievement.
2) Families are the consumers of public education, and each individual family is most familiar with its specific needs.
3) Strong evidence exists that technology-assisted learning leads to better student outcomes while also easing the workload on classroom teachers so they can more easily manage larger classes.
4) The 2015 Legislature was billed as “The Education Session,” but only a subset of the new programs enacted are associated in academic literature with improved student performance.
5) Nevada has significantly increased revenues extracted from higher education students and their families to reduce general revenue spending for higher education in real terms.
V. Public Employee Compensation and Benefits
1) Investment Management Policies and Practices: Nevada PERS is doing the important things right in this area.
2) The Discount Rate (DR): Determining the DR is highly controversial, especially in deciding the purpose of discounting and thus what standards shall be used to set the rate.
3) Forecasted Membership Annual Growth Rates.
4) Reference Working Lives and Retirement Periods.
5) Duty to the public interest, voters, taxpayers and future plan participants
VI. Economic Outlook
1) Government Overreach.
2) Demographics and Work-force Participation.
3) Debt in All Sectors and Net Savings and Investment.
4) International Economic Growth, Trade and Foreign Direct Investment.
5) Upshot: Continued Slow Economic Growth.
6) Innovation, Technological Change and Productivity.
7) Cost Disease.
8) Market Capitalism and Income Equality.
a) The trend toward inequality has slowed, but so has income growth.
b) Income Growth & Dispersion in the United States.
9) Nevada Prospects Are Similar to U.S. Prospects.
VII. Policy Prescriptions