Nevada is expected to tap a line of credit from its Local Government Investment Pool to help the state bridge its budget deficit.
Treasurer Kate Marshall proposed the LGIP plan, saying the state government can tap about $160 million from the fund to bridge the shortfall for the current fiscal year.
“The state gains two important advantages by using a line of credit from the LGIP: (1.) the money can be used at a much lower interest rate — 2½ percent, much lower than the current market — and (2.) the state has the ability to drawdown only the amount needed, when needed,” Marshall said in a statement. “LGIP clients also benefit, which will help local government agencies in the long term.”
The proposal would be taken up by the Legislature, which is expected to meet in special session as early as next week to address the state’s budget woes, according to published reports.
Legislative counsel Brenda Erdoes said Tuesday that the plan is legal under state law, according to a Las Vegas Review-Journal report.
The Nevada general fund has been hit hard by the recession. The state now expects to bring in about $5.8 billion for the 2007-2009 biennium, down from a $6.8 billion budget.
On Monday, the state Economic Forum, which is charged with making revenue projections the state uses to build its budget, projected that Nevada would bring in $5.7 billion in revenue during the 2009-2011 biennium, down a further 3% from the current biennium.