Gibbons considers layoffs and doesn’t want to borrow money to save jobs

CARSON CITY — While he has not decided to call the Legislature into a special session, Gov. Jim Gibbons said today he is looking at laying off state employees, cutting their salaries and adding unpaid furlough days to deal with a more than $50 million tax revenue shortfall.

That announcement was met with cries of unfairness from the chancellor of the state’s colleges and the head of a state employees’ labor organization.

Gibbons said he opposes tapping into an approved $160 million line of credit to cover the shortfall, although using the credit might save jobs of state employees.

The 2009 Legislature authorized the governor to borrow money to balance the two-year, $6.9 billion state budget.

But using the line of credit would be creating a debt, and that is “unacceptable,” Gibbons said.

“I would much rather balance the budget without asking the state to have an indebtedness,” he said.

Gibbons already has asked state agencies, including the Nevada System of Higher Education, to prepare by Dec. 15 two lists, one showing how they would cut their spending by 1.4 percent and the other showing 3 percent cuts.

He also has asked the Economic Forum to meet and prepare new state tax revenue projections by Jan. 19. The forum, a group of five business leaders, by law determines how much tax revenue is available for the state to spend.

Chancellor Daniel Klaich urged Gibbons to avoid cuts by using the $160 million line of credit.

In a letter to the governor, Klaich said cutting higher education spending now would be “virtually impossible,” since contracts have been executed for the school year, registration for the next semester is nearly completed and class schedules have been published.

“I know you will keep in mind that no agency budget took a larger and more disproportionate cut" in the last legislative session than the higher education system, Klaich stated.

State university and college budgets were reduced by 13 percent, and regents increased tuition by 20 percent over two years to make up for lost revenue.

“The students in our state colleges and universities are being asked again and again to shoulder the burden of a failing economy,” Klaich said. “This is not fair to them, and does a serious disservice to the long-term future of our state.”

Dennis Mallory, chief of staff of the American Federation of State, County and Municipal Employees Local 4041, questioned the fairness of having state employees suffer from additional cuts after their pay was cut 4.6 percent through unpaid furloughs by the 2009 Legislature.

The organization represents about 4,000 state employees.

“He just goes after the state employees again and again,” Mallory said. “I don’t believe we can take another hit.”

Assembly Majority Leader John Oceguera, D-Las Vegas, questioned whether Gibbons can cut salaries or add furlough days, both of which were ordered by the Legislature.

“I don’t think he can,” said Oceguera, who suggested last week that Gibbons use the line of credit to get through the current shortfall.

However, Mallory said Gibbons could lay off employees without legislative consent.

Both Gov. Kenny Guinn and Gov. Bob Miller imposed layoffs during their administrations without calling in the Legislature, which does not meet in its next regular session until Feb. 7, 2011.

Gibbons said today he will call the Legislature into session before June so legislators can repeal a law that prevents the state from applying for a $175 million federal education grant.

He wants legislators to repeal a 2003 state law that prevents teachers from being evaluated on the basis of their students’ test scores.

If the law is thrown out, then the state could apply for a Race to the Top grant from the U.S. Department of Education. Applications for the first round of grants are due Jan. 19.

Stacy Woodbury, Gibbons’ deputy chief of staff, said she spoke with federal Education Secretary Arne Duncan and was told Nevada will not lose funds if it doesn't meet the January deadline.

She said a second round of grants will be awarded in June, and states are eligible for only a January or a June grant, not two grants.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.