As the lights flickered out on the Strip in March, it wasn't just a grim signifier of the present pandemic — it was a harbinger of Nevada's economic fortunes to come. Gaming and room tax revenues, the state's fiscal lifeblood, was about to take a drastic cut.
The portent was borne out in a thousand ways across dozens of state agencies. After July's special session to address a $1.2 billion shortfall in fiscal year 2021, state budgets were slashed $400 million.
The fall out came in a thousand ways across dozens of agencies. ºÚÁÏÍø was no exception.
Senate Bill 1 in the special session called for nearly $73 million in approved funding for capital projects to revert to state coffers. The biggest casualty for the university was $20 million earmarked for the construction of the College of Engineering's new academic and research building.
"It is not unusual that when you have budget shortfalls, construction of new buildings may be put on-hold or deferred," said Dave Frommer, associate vice president of planning, design & construction, and real estate. "Building new facilities comes with significant upfront costs, as well as significant ongoing operations and maintenance costs. Aside from constructing and furnishing the new building, you have to cover utility, custodial, grounds, infrastructure, and other operating costs."
The state also reclaimed $25 million in funding for the School of Medicine's education building, though that project was still moving forward with previously committed money from a donor group, the Nevada health & Bioscience Corp. The project officially broke ground Oct. 29.
According to studies by Brookings Mountain West and consulting firm, Tripp Umbach, the facility will become the cornerstone of the Las Vegas Medical and, by 2030, could generate as many as 16,000 jobs and state revenues topping $121 million.
Likewise, all hope isn't lost for the College of Engineering expansion. There are some who believe the project may get picked back up in the 2021 legislative budget, which begins in February, although there’s no guarantee. If the expansion isn't approved in February, the project would then be on the shelf until the 2023 legislative session, which runs the risk of losing logistical momentum if costs go up during the two-year layoff.
"The building design is complete," Frommer said. "The State of Nevada Public Works Division could start construction fairly quickly if the money were here today. It might be a few months or so to start construction because permits are in hand and design is done. It's really about finalizing the guaranteed maximum price for the construction, and going through the state approval and contracting process for construction at that point."
If the state were not able to share in the funding for the project, the university could consider shouldering the entire financial burden of the new building itself, he noted, but that would require belt-tightening and sacrifices elsewhere on a campus already short on funds after absorbing approximately $95 million in budget cuts from the Nevada Legislative Special Session over the summer, which may not be feasible.
Other long-term construction plans — like a new building for the Lee School of Business, an interdisciplinary research building, and an academic success building, or new buildings for the College of Fine Arts — are looking to be further down the road as well.
Projects that had already been in the works and are entirely university-funded, like converting some Environmental Protection Agency buildings for classroom and lab use, are proceeding, helping to alleviate some space shortages on campus. As the EPA finishes moving out, the space will be divvied up among various education, academic, student support, and research activities.
The current budget crunch does share some similarities with the Great Recession, where ºÚÁÏÍø saw an overall 30 percent budget reduction over the course of the crisis, though at this early stage, it does look like the landing may be a bit softer (for now) thanks to action by federal and state governments.
"It hasn't been quite as bad yet" for all major construction projects, Frommer said. As the Great Recession began, the cuts to public works projects were more immediate. “In this instance, the availability of CARES funds, donor contributions for capital projects, and stability of some prior capital project funding allocation has been helpful. But we are very far out of the woods in my mind. Knowing that defeating COVID-19 is a significant effort that will take some time, and budget impacts are likely to take some time to stabilize and improve, it could get worse before it gets better."
