Budget outline avoids layoffs

CARSON CITY -- No state employees will be laid off or ordered to take unpaid furloughs as part of a plan to cut spending by 4.5 percent, or $517 million, over the next 18 months, Gov. Jim Gibbons said Friday.

Instead, the governor intends to delay construction projects, postpone the start of approved new programs, cap enrollment in some existing programs, and leave unfilled 800 noncritical job vacancies to cover about $320 million of the revenue shortfall.

Then he plans to ask the 2009 Legislature for about $200 million of the state's $267 million rainy-day fund to cover the remainder.

"Let's hope our pessimistic projections are as bad as it gets," Gibbons said about lagging tax revenues, acknowledging that his plan did not take into consideration the effects of a 14 percent slide in November gaming win that was reported earlier Friday. "There is very little else we can do."

Even with the reductions, state Budget Director Andrew Clinger said state agencies will have $721 million, or 12 percent, more to spend under the current two-year budget than under the previous budget.

Only last month Gibbons predicted state government should cut spending by $440 million, but that figure grew with the receipt of new tax revenue reports.

The governor kept cuts on state agencies at 4.5 percent by deciding to take more money than he originally anticipated from the rainy-day fund.

Under his plan, Gibbons said there will be "no special session (of the Legislature), no tax increases."

Inmates will not be released early from prisons, nor will the health care they receive be reduced.

Existing child welfare and juvenile justice programs will not be affected. Welfare subsidies under the Temporary Assistance to Needy Families program will not be reduced.

A 22-bed expansion of a psychiatric hospital in Las Vegas will go forward as scheduled in February.

But starting in April, the state will eliminate a new program championed by Assembly Speaker Barbara Buckley, D-Las Vegas, that has provided prenatal health care to 100 low-income women.

State Health and Human Service Director Mike Willden said assistance will continue for women now in the program, but the 10 to 12 new enrollees expected each month will not be served.

His agency also will cap enrollment in Nevada Check Up, a free health care program for children, at 30,000 starting in April.

There are 29,118 children enrolled in the program; that number was expected to increase to 32,000 in the coming year.

Buckley called it a "sad day" when a governor was balancing the budget by denying health care to working pregnant women and to children.

The governor could have avoided those cuts and a $93 million reduction in public education spending by using more of the rainy day fund and delaying additional construction and maintenance projects, she said.

A citizen could challenge Gibbons' authority to make the cuts without the consent of the Legislature, although Buckley opposes the Legislature itself filing litigation against the executive branch of government.

She said Gibbons' decisions would have won more acceptance if he had worked with legislators.

"We have seen a lack of collaboration by this late Friday afternoon decision," she added.

Secretary of State Ross Miller, a Democrat whose father, Bob, is a former governor, was more critical.

"This has been a flawed process from the beginning, veiled in secrecy with arbitrary deadlines and a complete lack of transparency," he said.

But state Sen. Bob Beers, R-Las Vegas, said Gibbons did what he had to do. He predicted the governor's decision to go forward on his own will provoke criticism.

"I think almost certainly there will be a brouhaha about this because that is how government works," he said. "However, at the end of the day, we all function under the Nevada Constitution, which is quite clear that we have a chief executive to make decisions just like this."

Clinger earlier attributed the need to cut spending to a tax revenue decline brought on by the collapse of the real estate market. Home sales in Las Vegas are off by more than 50 percent from a year ago.

That also has led to a drop in purchases of furniture, appliances, automobiles and other high-ticket items by home-owners, he said.

Unemployment in Nevada climbed to 5.4 percent in November 2007, the highest since May 2003.

Gibbons quipped that he was keeping the television set in his office turned off and not replacing burned-out office light bulbs as part of his own reduction.

"Our office was given the same reductions as every other department," he said.

Nevada is going through a short-term recession that will end gradually over the next 18 months as new resort construction begins in Las Vegas, Gibbons predicted.

He noted California and Florida have more severe revenue problems than does Nevada.

"Nevada is not unique in terms of what is happening to the economy," Gibbons said.

The reductions announced by the governor will be forwarded to the Legislature's Interim Finance Committee during its Jan. 24 meeting.

Clinger said the governor has the authority to reduce state spending without approval of the Legislature and their presentation to the committee will be made as an informational item.

Buckley, however, expects legislation will be considered in coming sessions that ensures legislators have a role in budget cut decisions.

Despite expecting criticism, the governor said he listened to legislators who wanted him to use more of the rainy day fund and postpone construction projects.

He questioned whether his critics could have done anything differently.

It is up to county school boards to decide how to reduce public school spending by $93 million, said Gibbons, who added that the state simply will reduce its appropriation to education by that amount over the next year and a half.

Gibbons said school districts could save $64 million by delaying the start of the education empowerment program, the expansion of full-day kindergarten and career and technical education, gifted and talented, and other programs.

Then the state's 17 school boards would need only to find where to cut another $29 million, or 1.5 percent, of total public education spending, he said.

Even with the cuts, state spending on public education will be $221 more per student this year than last year.

Willden said his Health and Human Services agency, the largest in state government, is cutting $78 million by reducing, discontinuing or delaying programs or services.

None of the cuts will affect clients currently receiving services, he said.

"We were very careful to look first at cutting some capital improvement and technology projects and one-shot expenditures," he said.

His agency will not fill 241 positions, and the state's mental health court will lose about $183, 000.

"(District) Judge (Jackie) Glass will be calling me shortly about this," Willden said.

Glass runs the mental health court in Southern Nevada.

Also, as a consequence of the budget cuts, the Health and Human Services agency will lose about $45 million in federal matching grants -- $40 million in Medicaid and $5 million in other funds.

Jan Gilbert, legislative lobbyist for the Progressive Leadership Alliance of Nevada, an advocacy organization representing multiple liberal-leaning groups in Nevada, gave Gibbons points for opting to dip further into the rainy day fund to cover the increasing revenue gap.

But she was disappointed by the capping of Nevada Check Up. PLAN wants Gibbons and legislators to look at the state tax structure in 2009 to see if all are paying their fair share, Gilbert said.

"Taxes are going to be on our agenda," she added. "There's an obvious imbalance in this state."

Gibbons has vowed not to support tax increases.