Gibbons, leaders near deal

CARSON CITY -- While refusing to give details, Gov. Jim Gibbons and legislative leaders said Thursday they nearly have reached an agreement on a plan to quickly cut state spending by $300 million and balance the state budget with few layoffs.

After a two-hour, closed-door meeting in the Capitol, Gibbons, Assembly Speaker Barbara Buckley and Senate Majority Leader Steven Horsford, both D-Las Vegas, declined to say, until it is completed, what their proposed solution will entail. They will meet again Tuesday.

"This is not a Republican or Democratic problem, a north or south problem, but a Nevada problem," Gibbons said. "We can work together, and we are moving to reach a final solution in the shortest amount of time."

"With cooperation and consensus we will get this done together," Horsford added.

The governor did not rule out the possibility that he might have to call a special legislative session in December to pass into law some of the proposals being discussed.

Gibbons said lawmakers are looking at a borrowing suggestion from state Treasurer Kate Marshall, who has said the state might secure a $150 million line of credit through the state's local government investment pool.

But the governor said the plan must be reviewed by lawyers to determine whether the state can borrow to meet current state expenses. Traditionally, the state borrows only to finance construction, highway and other long-term projects.

In response to questions, Gibbons added there also might be legal problems if he and legislators held a special legislative session now to start a 3 percentage point increase in room taxes.

Voters in Clark and Washoe counties backed the room tax increase in an advisory question on Election Day.

The proposal would bring in about $120 million a year, but Gibbons said implementing the increase now might not be legal. The question called for a July 1 date for the tax increase.

Gibbons also said lawmakers are not looking at new taxes but considering removing tax exemptions.

Gibbons added there already have been state employee layoffs, but lawmakers are trying to minimize additional layoffs and to avoid salary reductions.

Earlier in the day, state Budget Director Andrew Clinger said the state needs to cut $309 million in spending by the end of the fiscal year on June 30 because of declining tax revenue. But after a new analysis late Thursday, Clinger said the state is $286 million short of balancing the current fiscal year budget.

That is a major improvement from the administration's estimate of a $358 million shortfall last week.

However, Clinger said the deficit might climb again next week when the Taxation Department reports on new monthly sales tax collections and quarterly collections of payroll and other taxes.

Nevada state government operates under a two-year, $6.8 billion general fund budget. This year, Gibbons and the Legislature have cut state spending by $1.2 billion because of declining tax revenue.

The governor said recently that he expects there will be only about $5.7 billion in revenue available when he and legislators start working on a new two-year budget in February. The Legislature starts its 2009 session on Feb. 2.

The state Economic Forum meets on Dec. 1 and will make estimates of state tax revenue that the governor by law must use in creating his proposed state budget for 2009-11.

The forum is a group of five business leaders.

Gibbons said Wednesday he will give his State of the State address on Jan. 15, four days earlier than normal. That will allow legislators and others to attend the inauguration of President-elect Barack Obama.

Contact Las Vegas Review-Journal Capital Bureau Chief Ed Vogel at or 775-687-3901.