On the chopping block

Just when Gov. Jim Gibbons thinks he has cut enough spending to balance the budget, the state's fiscal picture worsens. From $200 million to $400 million, then $600 million. Last week, the two-year revenue shortfall was estimated at $898 million, and by Monday it had reached $910 million.

New programs have been axed and major construction projects have been delayed. The state's $267 million rainy day fund will be drained. Operating budgets are, for the most part, intact.

"One thing we are dedicated to and that is not digging further into the operational budgets," Gov. Gibbons said.

This is the correct approach. The governor has resolutely refused to increase taxes, an especially bad idea amid a struggling economy. And thankfully, it doesn't appear that Senate Minority Leader Dina Titus, D-Las Vegas, will get anywhere with her idea to float bonds to cover some state spending and put taxpayers in the red for years to come.

Gov. Gibbons and the state's legislative leaders, who met again Wednesday, seem to have the situation under control. But there are 15 months left in the current budget cycle, and an economic rebound might be a year or more away. There remains a strong possibility that Gov. Gibbons will have to make even more cuts before the Legislature convenes in February.

"If we have to go in and cut again it will be bad," Sen. Titus said. "There is nothing left to cut but operating budgets."

That means the governor might have to reconsider one expense he has declared off the table: the 4 percent pay raises for state workers and public school teachers scheduled to take effect in July. The raises will cost the state $130 million next fiscal year.

It's hard to justify the raises, promised when the economy was strong, when many taxpayers have seen their incomes drop -- or their jobs eliminated. Moreover, many state workers are already getting so-called "step" raises, some as high as 5 percent, which are handed out for each year of employment regardless of performance. When these "step" increases are combined with July's scheduled 4 percent hike, the result in some cases can approach a double-digit raise in a single year.

It's possible the state will be confronted with the choice of reducing or eliminating the pay raise or laying off hundreds of workers. Which would state employees rather have?

If Gov. Gibbons has to make additional cuts to state spending, state worker raises must be on the table.