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Gibbons calls for salary cuts

CARSON CITY — Gov. Jim Gibbons said Monday he will be the first to take a salary cut if it will help save jobs of state employees and school teachers.

Laying off state employees and teachers would be an “untenable situation,” he said in response to questions from reporters.

Instead, the governor wants to find a way that salaries of state employees and school teachers can be reduced to avoid layoffs in the wake of the state’s new $300 million budget deficit.

“I am willing to take a salary reduction,” said Gibbons, who earns $141,000 a year. “At this critical time, no one wants to be laid off before Thanksgiving, before the Christmas holidays.”

But Lynn Warne, president of the Nevada State Education Association, said there is no legal way to reduce salaries of teachers and school employees. They have signed contracts with school districts, and the districts are liable for the salaries, she said.

“The governor needs to stop with his no-taxes mantra and look where we can raise revenue or close loopholes,” she said. “We are in desperate times. But there are vital services that we still need to provide.”

Warne said her association will not back voluntary salary reductions although she is aware Gibbons and others might try to spin that position in a negative manner.

State employee organizations also have opposed voluntary salary reductions.

Gov. Bob Miller was forced to lay off 273 state workers during a recession in 1992-93 when the State of Nevada Employees Association refused to give up a legislatively approved salary increase.

Dennis Mallory, the leader of the American Federation of State, County and Municipal Employees Local 4041, called Gibbons’ suggestion “ridiculous.” He said salary surveys show state workers earn almost 30 percent less on the average than those in large counties in Nevada.

“This is a horrible idea,” Mallory said. “Are we coming to the time when employees fall down hurt on the street that we will let them lie there? We are seeing the eroding of the middle class.”

In private industry, revenues fall when the customer base declines, Mallory said, but in state government, the customer base increases when revenue declines.

After a Friday meeting with legislators, Gibbons seemed to be backing away at least slightly from his repeatedly expressed opposition to any tax increase.

On Monday, he again said “everything is on the table” when it comes to dealing with the deficit.

But then he expressed his opposition to all tax increases, except for those approved by the public or the affected industry.

In response to questions, Gibbons said he opposes taxing the mining industry, increasing the state’s 6.75 percent sales tax rate and implementing a tax on services.

“We are not California,” he said. “We do not need to tax everything, including the air we breathe in this state.”

California Gov. Arnold Schwarzenegger last week announced support for a 1.5 percentage point increase in his state’s sales tax rate and taxing services such as dry cleaning and auto repairs.

During a public forum conducted by Assembly Speaker Barbara Buckley, D-Las Vegas, in Reno last month, some Nevadans called for a tax on gold.

Nevada mines produce more than 6 million ounces of gold a year. The only special tax they pay under the Nevada Constitution is a net proceeds of minerals tax, which brings the state about $30 million a year.

Gibbons, who once worked as a mining geologist and a mining company lawyer, fears that if gold were taxed, the tax would prevent mining from being profitable.

“I am not in favor of any tax that puts at risk a business or the economy of this state,” he said.

To produce an ounce of gold in Nevada mines cost an average of $408 per ounce last year. Gold sold at an average rate of $690 per ounce in 2007. It sold for $747 per ounce Monday on New York markets, down from a peak of a little more than $1,000 in March.

Gibbons’ comments Monday were an expansion of statements he made after his Friday meeting with legislators. He said then that the state needs to cut another $300 million in spending in the fiscal year that ends June 30 and reduce spending by another $1.5 billion for the two-year budget that starts July 1.

He and the legislators already have reduced spending by $1.2 billion since January as state tax revenues have dropped because of the economic slump.

Gibbons reiterated Monday that he will not support any tax increases except those supported by citizens or the affected industry.

He said he can support the 3 percentage point room tax increase backed by voters in Clark and Washoe counties on an advisory question on the Nov. 4 election ballot. That tax would bring in about $120 million a year.

Gibbons hopes that his Nov. 17 meeting with legislative leaders can produce bipartisan cuts that do not include layoffs.

He said he thinks proposed cuts or changes that come out of that meeting — which must be imposed quickly — would have to be approved in a special session of the Legislature. The Legislature does not go into its regular session until Feb. 2.

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

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