Gibbons to draw bottom line

CARSON CITY -- Gov. Jim Gibbons loves to tell a story about how the recession has affected Nevada.

It goes like this: Nevada state government is like a family. Families across the state are sitting down at the dinner table and looking at their bills. Some they have to pay. Others they will postpone as long as possible. But the amount they can spend has dropped. They have to make sacrifices. They are lucky just to have jobs. Many people are standing in unemployment lines.

Expect Gibbons to deliver a version of that story tonight when he makes a 20-minute, televised State of the State address to Nevada families about how the state government must reduce its spending by 20 percent:

State government must reduce spending by $881.4 million between March and June 30, 2011, which is the end of the state's two-year budget cycle. Like families across Nevada, state government also must sacrifice.

Daniel Burns, Gibbons' communications director, said the governor tonight won't be mentioning all of the areas where he will propose cuts, but he will talk about some of them.

"He wants to share his ideology with the citizens. He will make all of his proposals known in the days ahead," Burns said.

So far, legislators have not even agreed with an initial cut list released by Gibbons that covers not even half of the projected deficit. They will hold a series of meetings this week to gather public opinion on Gibbons' proposed cuts and other ideas for cuts. Then Democratic legislators are expected to announce their own list of proposed cuts.

Gibbons will call a special legislative session for the week of Feb. 22, at which they all must agree on cuts that would be implemented as early as March. It might be a one-day session, like two special sessions in 2008 when the governor and legislative leaders agreed in advance on where to make cuts.

The new development that Gibbons likely will mention tonight is an agreement by the mining industry to make an advance payment of as much as $100 million in sales taxes to help the state get through the economic crisis. Mining made such an advance payment last year. Gibbons is a former mining lawyer and geologist.

The mining industry is facing a tax battle with the Progressive Leadership Alliance of Nevada, which is circulating a petition among registered voters that would dramatically increase taxes on gold and other minerals. But the initiative petition, if approved by voters in two elections, wouldn't bring in any new revenues until 2013.

The governor also is expected tonight to tell officials from public schools and the Nevada System of Higher Education that he won't tell them where to cut their budgets, although he will tell them how much they must cut. Allowing the schools themselves to make the decisions will be good news to school administrators who have urged the governor to give them more flexibility.

If 10 percent cuts are ordered, that would mean cutting the higher education budget by $147 million and the public schools budget by $166 million.

Layoffs of at least 236 state workers and eliminating 362 unfilled state jobs also were on Gibbons' initial cut list.

On top of those cuts, Gibbons likely will propose reducing the salaries of all state employees by 6 percent, saving $180 million a year, and cuts for public schools and higher education as well.

In his known cut list, the governor has proposed closing the 140-year-old Nevada State Prison in Carson City and reducing mental health services and payments to hospitals.

Look for Gibbons to propose early release for prisoners without violent felony backgrounds. And he might use $90 million in federal funds to help close the budget gap.

But the known cut proposals don't come close to the $881 million shortfall. Nevadans should be prepared for more dramatic reductions.

To paraphrase what Gibbons also has been saying: People have to get used to shrinking state government. State government as we know it now never will be the same.

State Senate Majority Leader Steven Horsford, D-Las Vegas, will follow Gibbons' speech with an expected 8-minute Democrat response.

At this time, Republican Gibbons and his traditional Democratic foes in the Legislature have called an uneasy truce.

Both have pledged the solution to the deficit won't include increases in taxes at a time when the state's unemployment rate is 13 percent. Nevada employers cut 118,000 jobs last year and are expected to whittle away another 90,000 in the next two years.

Assembly Speaker Barbara Buckley, more than anyone, has been trying to come up with a way to explain easily to people the gravity of the state's financial situation.

To give an example of the magnitude of an $881 million shortfall, Buckley, D-Las Vegas, noted that if all 16,000 state employees were laid off -- something that no one has suggested -- state government still must trim another $300 million to balance the budget.

The state employee total does not include teachers and other public school personnel, or university and community college faculty and staff. Their salaries largely are paid through state appropriations but controlled by elected boards that work independently of the Legislature and governor.

Buckley has said that Carson City isn't like Washington, D.C., where the solution to revenue deficits seems to be greater deficits.

The Nevada Constitution requires a balanced budget.

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