Gibbons mum on special session despite latest tax revenue drop

CARSON CITY -- The Gibbons administration was mum today on whether the governor will call the Legislature into a special session early next year to deal with a $60 million shortfall in tax revenue during the first quarter.

Gov. Jim Gibbons will decide either later this month or early in January whether to call a special session, a step only he can make under the state constitution, according to his communications director, Daniel Burns. The next regular session of the Legislature does not begin until February 2011.

But Burns said the governor still has not tapped into a $160 million line of credit authorized by the 2009 Legislature to deal with revenue declines.

"We also first have to look at how much we have saved," Burns added.

Gibbons has asked state agency directors to end all unnecessary spending, even on purchasing paper, along with continuing a hiring freeze, he said.

The probable need for a special session became apparent today when tax receipts for the first quarter of the fiscal year were released. Sales taxes are $12.5 million less than projected by the Economic Forum, the group of five business leaders who in May determined how much money would be available for the state to spend during the two fiscal years that began July 1, 2009. The forum's projections are binding on the Legislature and governor in creating the state budget.

Payroll taxes for July through September were down $15 million from Economic Forum projections. Cigarette tax receipts were down $1 million from projections while real property transfer and insurance premium taxes were down by about the same amount.

But the biggest decline, reported last week, was in gaming taxes, which were off by about $25 million, about 10 percent less than last year. The Economic Forum projected a 3.7 percent increase in gaming taxes for the current fiscal year.

Forum members predicted the increase largely because of the opening of the CityCenter project on the Strip this month.

In coming weeks, Gibbons will talk with legislative leaders, agency leaders and economists to determine what steps the state will take to cover the decline, Burns said.

"This was hardly unexpected," he said. "Drive down the street and take a look."

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