State Budget Practice Report Cards and Budget Resource Guide

Nevada received an average grade of C for budget forecasting for fiscal 2017 through 2019—despite its use of consensus revenue estimation, a best practice it shares with twenty-eight other states. With its heavy reliance on volatile revenues from tourism, gambling, and mining making it difficult to estimate tax collections, Nevada casts a wide net to estimate revenues, ensuring that its forecasts include input from the Economic Forum, a panel made up of five private sector experts in economics, taxation, and other disciplines appointed by the governor, Senate majority leader, and House speaker. The strong process in consensus revenue estimating was not able to overcome Nevada’s lack of long-term forecasting, however: The state’s average grade was hurt by its practice of confining forecasts to the biennial budget rather than for at least three years.

The state earned B averages in budget maneuvers, reserve funds, and transparency. Like all but five other states, Nevada’s transparency grade suffered from a failure to provide deferred infrastructure maintenance costs in its budgetary reports. In handling reserves, Nevada is one of twenty-nine states that did not link rainy day funds to historical revenue volatility, a best practice cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action.

Nevada averaged a C in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. The state has made at least full actuarially determined contributions for pensions since 2016—they were 75 percent funded as of 2018, 5 percentage points above the total for all states—but it has not made similar OPEB contributions.

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To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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