Education takes hit in Gibbons’ budget proposal

CARSON CITY — Higher education faced the biggest cuts Thursday in Gov. Jim Gibbons’ budget proposal, which sought to bridge a huge revenue gap in the coming two years.

Of the $633 million Gibbons proposed cutting from the level budgeted in the previous two-year cycle, $473 million, 75 percent, was to come from the university system.

"I would blow my brains out if I thought this was going through," said Jim Rogers, the state higher education system’s outspoken chancellor.

As expected, the governor’s budget also included a 6 percent cut in state worker salaries, including those of teachers, and an increase of 3 percentage points in the hotel room tax in Clark and Washoe counties.

Gibbons’ two-year general budget plan of $6.2 billion is about 9 percent less than the $6.8 billion budget approved two years ago by the Legislature. That spending never materialized, however, as tax revenues have declined because of the poor economy, including a 9.1 percent projected tax loss during the current year.

The governor and legislators cut general fund spending by $1.5 billion during 2008.

This is the first time in more than three decades that a proposed operating budget hasn’t been larger than the previous biennium’s, with gains in recent years averaging 15 to 20 percent.

Gibbons’ chief of staff, Josh Hicks, said the governor had no choice at a time when Nevada tax revenue has been shrinking. Nevada faces one of the severest revenue shortfalls among the 50 states, he said.

To cover an estimated $2.3 billion gap between the amount of money needed to run state government at its current level and the amount of revenue coming in, Gibbons also proposes cutting state worker health insurance benefits, taking $79 million in tax money from Clark and Washoe county governments and closing rural health clinics.

His budget proposal relies on $108 million the state hopes will be coming from a federal economic stimulus bill that has not yet passed in Congress.

BIG HIT, BIG SURPRISE

But the biggest surprise, in the budget plan was the $473 million higher education cut. While $69 million was to come from salary cuts, and an additional $28 million from the health benefit reduction, the governor’s plan didn’t specify how the other $376 million would be trimmed from the university and college system.

The medical school, the law school, the dental school, the state college system, the Desert Research Institute, athletics, student services, graduate assistants and scholarships all could be scuttled, and the savings still wouldn’t add up to $473 million, according to figures in the university system’s operating budget.

The $473 million represents a decrease of more than one-third from the amount budgeted for higher education in the previous biennial budget.

"This is wrong. It is fundamentally wrong," said Michael Wixom, chairman of the Board of Regents. "It is wrong for my children. It is wrong for my grandchildren. It is wrong for the future of this state. It is wrong for the people of this state. It is wrong. It is wrong on every possible level."

Wixom, a Republican, is normally soft-spoken and calm. But he was clearly agitated Thursday, saying the proposed cuts would require "dismantling the entire system."

The massive scale of the proposed cuts took nearly everyone by surprise. Gibbons earlier had asked all state agencies to submit budgets with 14 percent cuts.

As part of efforts to cut costs, UNLV announced Thursday that it is offering buyouts to its classified staff, a move similar to buyouts offered to professional staff last year. About 140 people are eligible.

"I’m in a state of shock. The figure is so large," Nasser Daneshvary, a UNLV professor of economics and the president of the faculty senate, said of Gibbons’ proposed budget.

Daneshvary said such devastating cuts would drive away faculty, from the young and promising to the old and established.

Rogers, who has often feuded publicly with the governor over higher education funding, said he does not think the Legislature will support Gibbons’ plan. The chancellor has letters from 54 of the 63 legislators promising support for higher education, he said.

"The governor is irrelevant," Rogers said.

Legislators will not accept such drastic cuts, he said.

Hicks said Gibbons thinks the higher education system should be more self-funding. The regents can increase tuition if they want more money, he said.

PAY CUTS VERSUS LAYOFFS

To keep general fund services at the levels anticipated two years ago, the state would need $8 billion in revenue, said Budget Director Andrew Clinger, about one-third more than the $5.8 billion that is available, according to the latest projections.

The 6 percent pay cut that Gibbons is proposing for state employees comes on top of the elimination of merit and step increases. Public employee and teacher unions have objected to those proposals and contend they would not be legal because they would violate negotiated contracts.

Clark County Schools Superintendent Walt Rulffes thinks the School District would not be in the legal position to cut employees’ salaries by 6 percent. The salary cuts, in essence, are a cut in services, Rulffes said.

"It has to come out of programs," he said.

Although the superintendent said the proposed salary cuts probably were unlawful, he also said he has fought too hard to increase teachers’ pay to see it cut.

"It’s an outrageous proposal," Rulffes said. "I will fight to maintain teachers’ salaries. We certainly don’t want to be stepping backwards now.

"We look now to the Legislature to right this proposal by the governor. I think the Legislature will head it off."

Gibbons has said the pay cut is an alternative to massive layoffs. Even with the pay reductions, 375 state employees stand to lose their jobs.

Under the proposed cut in health benefits, the state would pay 75 percent of its employees’ premiums, down from 90 percent, Clinger said.

Retired state employees would see their health care subsidy reduced, and it would be terminated when they reach age 65.

Meanwhile, Gibbons plans to introduce a bill providing that employees hired after July 1 of this year would not participate in the Public Employees Retirement System, the state’s pension plan.

Hicks said that a typical state worker makes about $50,000 per year. Under the budget plan, that typical employee would lose $3,000 in pay, while paying more than $1,000 a year more for health insurance.

CULTURE, MENTAL HEALTH, PRISON CUTS

The only agency hit harder, proportionally, than the higher education system under Gibbons’ plan is the Department of Cultural Affairs, slated for a nearly 40 percent cut. Agency officials said that would require museums to cut operations to four days a week.

Another agency Gibbons proposes cutting back is the Nuclear Projects Agency, which recently has come under fire because former director Bob Loux gave employees and himself unauthorized salary increases.

Gibbons’ plan calls for cutting the five-member office to two and putting those employees within the governor’s office in the Capitol.

Gibbons’ proposals would see the closure of eight mental health clinics out of 20 in rural counties and the Nevada State Prison. The proposals would cap at 25,000 the number of children enrolled in Nevada Check Up, which provides health care for poor children.

Mike Willden, director of the state Department of Health and Human Services, estimated that as many as 55,000 children in Nevada are eligible for the program.

REVENUE SOLUTIONS

Although cuts cover most of the budget gap, part of it is made up in revenue increases. Gibbons has long campaigned on his opposition to new taxes, but he has said he makes an exception for increases supported by voters.

Thus, Gibbons’ budget includes a tax increase that would raise an estimated $292 million over the biennium. The 3-point increase in the hotel room tax was approved in November by Clark and Washoe county voters.

Gibbons also proposes requiring casinos to pay taxes up front on the markers they issue, which would generate an estimated $31 million. Currently, the tax is not paid until the markers are repaid.

PROPOSAL REACTION

Another source of revenue in Gibbons’ proposals, the $79 million in property tax revenue he plans to take away from Clark and Washoe, already was drawing local officials’ wrath Thursday.

Clark County Commission Chairman Rory Reid, a Democrat who is considering running against Gibbons in 2010, issued a statement calling the plan "shortsighted and irresponsible."

"Clark County is a partner with the state in providing services to the citizens most in need, whether they are jobless, homeless, or abused and neglected," Reid said. "The governor is simply avoiding making the tough decisions. Instead, he is trying to pass these difficult choices on to local governments."

Commissioner Lawrence Weekly said he worried that diverting money from the general fund could hurt those who need the county’s services the most. But he also thinks the county should help the financially strapped state any way it can.

"It’s our state, and we all need to do whatever we can to help our state," Weekly said. "Everybody is going to have to pitch in."

Commissioner Tom Collins argued that the state is trying to have it both ways by limiting the county’s property taxes and then siphoning its revenue.

"If the Legislature and state will remove the cap on property taxes, I will share with them," Collins said. "They can’t tie our hands and come dipping in the pot."

Dennis Mallory, chief of staff of the American Federation of State, County and Municipal Employees Local 4041, called the cuts to state workers crippling and said they would affect everyone who does business with the state, not just employees and their families.

"We can’t provide services when our caseloads are twice as large as before," Mallory said. "What are our employees going to do? Ask for public assistance? I guess the alternative is we work until we die."

Review-Journal writers James Haug and Scott Wyland contributed to this report. Contact reporter Molly Ball at mball@reviewjournal.com or 702-387-2919. Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901. Contact reporter Richard Lake at rlake@reviewjournal.com or 702-383-0307.

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