Forum to figure shortfall

CARSON CITY -- For those with more than a passing interest in the state's economic woes, all eyes turn today to a panel of private citizens with the unenviable task of predicting Nevada's financial future.

The Economic Forum, with four of the five members brand new, will meet to try to determine just how deep of a hole the state budget is in.

Gov. Jim Gibbons issued an executive order setting the meeting to get outside views on the size of the latest shortfall, which ranges according to differing estimates from a little more than $100 million to as much as $240 million.

Gibbons will use the estimate generated by the forum as his baseline for again trying to balance the current two-year budget. The second year of the spending plan starts July 1.

Spending already has been reduced and other revenue sources tapped to cover a $913 million shortfall. But another round of cuts is now on the table for Gibbons and lawmakers, who are scheduled to meet in a special session starting Monday to make the necessary and potentially painful adjustments.

Eliminating cost-of-living increases, closing a prison and cutting state programs and services are all on the table for discussion by Gibbons and lawmakers.

The forum's one returning member is Leo Seevers, a retired Reno banker reappointed by Senate Majority Leader Bill Raggio, R-Reno.

Also serving are Michael Alastuey, who formerly worked with Clark County and the Clark County School District and who now runs VRJ Consulting; John Restrepo, a resident of Las Vegas who serves as the principal for Restrepo Consulting Group LLC; Linda Rosenthal, a Reno resident who serves as the director of treasury operations for International Game Technology; and Cathy Santoro, a Las Vegas resident and senior vice president and treasurer of MGM Mirage.

"Being a new member I have an open mind, and I'm looking forward to the data tomorrow," Alastuey said.

The panel will listen to analyses from the Legislature's fiscal division, the state budget office and the state Gaming Control Board and then come up with its own projections for how state revenue collections will fare over the next year, from sales to gaming to cigarette taxes.

Neither the state budget office nor legislative analysts were releasing their estimates until today's meeting. One hint at the size of the newest deficit projection was provided by state Budget Director Andrew Clinger, who asked agencies on Tuesday to prepare additional 4 percent cuts for "discussion purposes only." Cuts of 4 percent would save nearly $130 million.

The forum has met since 1994 but only in advance of and during regular legislative sessions. It was created by the Legislature in 1993 to try to take politics out of setting revenue estimates. The panel's revenue estimates must be used by the governor and Legislature in adopting a balanced budget.

But no such mandate exists for the work the forum will produce today, and even calling the panel together has been criticized by some lawmakers, most notably Assemblywoman Sheila Leslie, D-Reno, who delivered a letter to that effect to Gibbons on Wednesday. Leslie said the state and legislative fiscal staff do not have time to prepare adequate information to present to the panel.

The difficulty in making revenue projections, especially two years into the future, can be seen in the forum's estimates for the current budget made in May 2007: a little more than $6.8 billion. With the decline in the housing market and a general economic slowdown, the revenues are expected to come in closer to $6.2 billion and probably even lower when the budget ends on June 30, 2009.

When additional spending is factored in for such programs as Medicaid, with the additional support the state must provide to cover revenue shortfalls in local school district budgets, the total state budget shortfall Gibbons and lawmakers have had to deal with is expected now to exceed $1 billion.

State Sen. Steven Horsford, leader of the Senate Democrats, issued a statement Thursday calling on Gibbons to skip the special session and collaborate with lawmakers on a solution to the shortfall.

Canceling the 4 percent pay increase due July 1 for state employee and teachers, an action that would require legislative approval, is a "bad idea" and "doesn't have the support of our elected legislators," he said.

"We don't need to make the budget shortfall worse by holding a costly special session," Horsford said.

Ron Cuzze, president and CEO of the Nevada State Law Enforcement Officers' Association, submitted a recommendation to the governor, suggestion a $5 surcharge on traffic citations issued by state law enforcement to cover increasing fuel costs.