Legislators get creative in face of budget crunch

CARSON CITY -- Unable to quickly locate sure sources of funds to reduce an estimated $887 million revenue shortfall, Nevada legislators opened the floodgates Thursday to new and unusual ideas that could generate more revenue.

Senate Majority Leader Bill Raggio said the state could secure $250 million by leasing many of its buildings, other than the state Capitol, to private companies. The state would pay rent and other fees to investors for a 20-year period, then reassume ownership of the buildings.

Arizona secured $735 million through a similar plan, and California hopes to gain $2 billion, according to Raggio, R-Reno, who said he got the lease idea from GOP gubernatorial candidate Brian Sandoval.

Assembly Speaker Barbara Buckley, D-Las Vegas, proposed that the state's home foreclosure mediation program be expanded to include small businesses and a $500 fee assessed on financial institutions when they file a foreclosure notice.

Thursday's hearing before the Legislature's Interim Finance Committee included little discussion of these two revenue enhancement ideas, and no discussion at all of spending cuts that will be needed by the state to survive the economic downturn.

Despite legislators' hopes, and with a special session of the Legislature just five days away, the day saw no breakthroughs in negotiations with businesses, including casinos and mining companies, to voluntarily pay higher taxes and fees to help the state out of its bind.

Business representatives said Wednesday that they're willing to pitch in, but that the amounts sought by legislators -- $200 million from businesses and casinos and $100 million from mining -- was just too much.

One indication of the intensity of the situation, and the inability of legislators to find new revenue, was reflected by the announcement that the committee's final pre-session meeting Monday that had been planned to start at 9 a.m. won't begin until 3 p.m.

Raggio said his leasing proposal might be considered "off the wall" to some, but it is a plan that many states soon will look at since it raises money without increasing taxes.

He said about $300 million of the proposed cuts Gov. Jim Gibbons wants to make to cover the shortfall are just "too ugly" and these times call for unusual action.

"Without having more analysis, I couldn't commit one way or another, but it should be definitely considered," said Senate Majority Leader Steven Horsford.

"This what this forum is for," Horsford said. "We need to bring options that none of us knew were liable."

Buckley requested that the state prepare a cost-benefit analysis on the lease plan, adding the rental payments might make it cost-prohibitive.

She also suggested the state launch a new tax amnesty program, noting that the last one in 2008 netted $41 million.

Also Thursday, state Taxation Department and Insurance Division executives questioned whether hiring new auditors would lead to the recovery of hundreds of millions of dollars in uncollected taxes as anticipated by legislative proposals.

Taxation Director Dino DiCianno said some of the uncollected taxes go back 20 years and the companies might no longer exist. In other cases, companies are in bankruptcy.

Scott Kipper, the Insurance Division administrator, said Gibbons proposes he hire a couple of new auditors, but they probably will collect just $5 million in overdue insurance premium taxes.

DiCianno said the companies that owe taxes have legal rights to argue their bills in court, and the state could lose.

"There is no guarantee more revenue can be generated by more auditors," he said.

Although no agreement with mining on new revenues was reached Thursday, Nevada Mining Association representative Pete Ernaut said there's still time.

"We are free the next four or five days to negotiate," Ernaut said.

Buckley said a petition from the Progressive Leadership Alliance of Nevada to put higher mining taxes on a statewide ballot should give the industry incentive to pay more now to help the state.

"When people see folks working together as a community, they are less likely to take strident action," Buckley said.

The petition, which the Nevada Mining Association has filed suit in state court to block, is expected to be popular with voters if it does make its way to the ballot.

In such an event, Buckley said it behooves the industry to have a positive image with voters.

"With mining you have an initiative petition pending, and if people see an industry stepping up to be part of the solution, they will consider that before they vote to put taxes on the ballot," she said.

Horsford was optimistic. "We expect mining and other private-sector industries will be part of the overall solution to balance this budget," he said.

Initially pegged at $881 million, the estimated shortfall was reduced last week to $871 million by state analysts based on loan interest savings, but was increased this week to $887 million because of a new report showing a continued decline in gaming tax receipts.

Review-Journal writer Benjamin Spillman contributed to this report. Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.