CARSON CITY – When the dust settled from the Economic Forum meeting late yesterday, the message was clear: Governor Jim Gibbons and the Nevada Legislature have an enormous challenge to rebalance the state budget – a $580 million challenge that could still get worse.
The five-member forum of private sector financial experts, called together by Gibbons to get its take on the depth of the state’s budget woes, radically lowered its tax revenue estimates for this fiscal year and next.
The result is two years of tax revenues that are 9.2 percent lower than originally projected by the forum last year after $776.3 million in tax increases approved by the 2009 Legislature are factored in. The budget created less than eight months ago using a $6.3 billion revenue estimate will have to see major reductions to come back into balance at a level of $5.7 billion.
The forum heard doom and gloom scenarios – from continued high unemployment, lower gaming revenues and a lagging economic recovery – for much of the day before finally making its projections on 10 major revenue sources.
Other smaller revenue sources will be re-projected by legislative staff, which could affect the final number to a small degree. Required public school funding could add to the total as well since the state is required to make up any shortfalls and much of the public education funding comes from sales taxes, which were significantly reduced in the new forum projections.
Now that the forum’s work is done, the tough job of making the needed cuts gets under way.
A special session is expected to be called by Gibbons for some time in February.
State Budget Director Andrew Clinger said meetings with agency chiefs are scheduled for all of next week to begin the process of deciding what can be cut.
“We will begin making some decisions on what cuts we can accept and those that are not palatable,” he said. “The cuts won’t be across-the-board. Absolutely some agencies will take a greater hit than others.”
When the program cuts are finalized, then Gibbons will look at other alternatives for closing the remainder of the gap, including the possibility of further pay reductions for state employees, Clinger said. No budget cut decisions have yet been finalized, he said.
Gibbons said Thursday he believes a special session of the Legislature is inevitable to deal with the budget cuts. An announcement is expected soon now that the forum estimates are complete.
Gibbons said the session is needed to fix the budget problems created by the Democrat-controlled Legislature, a characterization rejected by Democrat lawmakers.
“I believe the Democrat-controlled Legislature is partly responsible for many of the economic problems our state is facing, but unfortunately, the only way to correct some of their mistakes is to call them together in a special session,” Gibbons said. “All of our economic indicators are pointing toward the need for a special session of the Nevada Legislature.”
Gibbons, who is running for re-election but facing stiff opposition in the GOP primary, blamed legislative Democrats for the current fiscal crisis facing Nevada.
“The Democrat-controlled Legislature raised taxes and increased spending, while I stood by my promise to the voters by vetoing their higher taxes and spending,” he said. “But they wouldn’t listen and now we have to endure the consequences of their actions.”
Gibbons said that during the last legislative session state legislators raised government spending by $1 billion.
“They also raised the payroll and sales taxes, leading to additional layoffs and placing a greater financial burden on Nevada families,” he said. “Today the recession continues and Nevada’s unemployment rate ranks second in the nation.”
Assemblywoman Sheila Leslie, D-Reno, said Gibbons’ comments are designed for campaign purposes and don’t serve to resolve the serious budget problems facing the state.
“The governor is throwing another one of his temper tantrums,” Leslie said. “I’m sure voters know the facts. The entire country is in economic turmoil.”
The modest tax increase approved by a bi-partisan vote in the Legislature is not to blame for the state’s woes, she said.
“It is more complex than that, and the governor knows that as well,” Leslie said. “He is striving for political relevancy by pointing the finger at the opposition party.”
In comments made Thursday on the Nevada Newsmakers program, Assembly Speaker Barbara Buckley, D-Las Vegas, said recent budget meetings with Gibbons have not been fruitful.
“What we hear from the governor in these meetings is, basically, “I’m going to announce a plan in my press conference in 30 minutes,” Buckley said. “With one recent legislative leadership meeting, he scheduled it after his announcement. This is not the collaborative approach we need.”
