Gibbons to plot budget course

CARSON CITY -- Gov. Jim Gibbons will deliver a special State of the State address Feb. 8 to discuss the economy and propose steps to cover an estimated $1 billion shortfall in the taxes that fund state government.

During his 6 p.m. address, the Republican governor will set the dates for a special session of the Legislature at which he and Democratic legislators, with whom he has feuded over the past year, must agree on ways to plug the revenue shortfall.

"Just like families all across Nevada suffering to make ends meet, state government must live within its means," Gibbons said in making his announcement Monday. "It is irresponsible to spend money we don't have. The state simply must reduce spending. The time for legislative hearings and other delays has long since passed. It is time for decisive action, and that is what I plan to do."

But there's a big hurdle standing in Gibbons' way. He has yet to set an agenda for the special session. Gibbons, who has championed spending cuts and no tax increases, needs the support of Democrats, who control both the Senate and the Assembly, if any solutions are to be enacted. They will talk again today at their third closed-door meeting to iron out some of their differences.

The special session probably will come shortly before the end of February because the governor earlier asked state agencies, school districts and the Nevada's universities and community colleges to submit plans on how they would cut their budgets by 10 percent starting March 1.

Assembly Majority Leader John Oceguera, D-Las Vegas, said Friday that the Legislature would talk about the shortfall during a Feb. 3 meeting of the Interim Finance Committee and hold public meetings on weekends and evenings afterward to gather the public's input on dealing with state budget problems.

Gibbons' announcement comes after Friday's determination by the Economic Forum, a group of five business leaders, that there will be a $580 million shortfall in the state's two-year $6.9 billion budget between now and the end of the budget period June 30, 2011.

But the forum did not estimate the shortfall in all sources of taxes, including sales tax revenues that go directly to education, or the increase in the Medicaid caseload, the free health program for poor people.

Estimates are that sales taxes going to schools are about $250 million short of projections and that the state needs another $60 million to keep up with Medicaid growth and $9 million to cover shortfalls in the Temporary Assistance for Needy Families program.

That all adds up to about $1 billion, the Gibbons administration has said.

Gibbons' special session announcement was met with concern from James Dean Leavitt, chairman of the higher education system's Board of Regents.

In a letter to the governor, he said that if there is a uniform cut in state agency spending, then that would be equivalent to a 20 percent hit on already hard-hit Nevada System of Higher Education.

During the 2009 Legislature, state appropriations for the universities and community colleges were cut about 13 percent.

"This would be cataclysmic to the Nevada System of Higher Education," said Leavitt about another cut.

In his letter, Leavitt asked the governor not to restrict the business that the Legislature will consider during the special session.

But Gibbons, in a news release, said that under the state constitution, he determines what will be discussed at a special legislative session.

Gibbons will meet at 2 p.m. today with legislators to hear their suggestions on how to cover the shortfall.

During two previous closed-door meetings with legislators, he offered his ideas, including an education plan that would end a requirement that the state fund class-size reduction programs and full-day kindergarten in some schools.

Legislators already are resigned to dramatic cuts in state programs or to cutting wages of state workers, teachers and university and community college faculty members and support staff.

"I think we have to do deeper cuts," said Assemblyman Lynn Stewart, R-Henderson. "It is such a huge amount. Some are going to have to come from education."

Stewart doubts there will be a move during the special session to increase any taxes because the gaming industry and businesses are suffering in the recession.

Assemblyman James Settelmeyer, R-Gardnerville, said legislators should consider canceling all programs the state has added over the past 10 years.

"We cannot afford them," he said. "I sincerely hope there is a willingness (between Gibbons and legislative Democratic leaders) to come together and do what is right. But right now, I don't see that."

Both assemblymen said they prefer salary cuts to layoffs.

Assembly Speaker Barbara Buckley, D-Las Vegas, wrote Gibbons two weeks ago and requested that everything possible be done to avoid cuts to education.

She said the state needs to analyze all reserve and unclaimed property accounts, review agency cut proposals and collect all unpaid taxes.

In a legislative hearing Monday, Buckley said Nevada could create jobs by becoming a transportation, distribution, logistics and aviation cargo hub.

"We must bring new jobs to Nevada," said Buckley, noting that the state has low taxes and must do more to attract new businesses.

But Rosemary Vassiliadis, deputy director of McCarran International Airport, said that the airport does not have "big cargo facilities" and that its chief mission remains having the passenger capacity to "fill hotel rooms."

More cargo facilities will become available in 2012 after Terminal 3 of the airport is completed, said Vassiliadis, who noted 1,800 people are working on the project.

Vassiliadis declined to estimate the number of people who will work at the planned cargo airport at Ivanpah, set to open in 2020.

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