Gubernatorial candidates steer clear of economics

Both major party candidates for governor of Nevada are touting plans they say will improve Nevada's dismal education results.

Neither, however, appears eager to tackle the subject of economics, at least when it comes to the state budget.

Democrat Rory Reid and Republican Brian Sandoval have repeatedly asserted they will balance the state's 2011-13 budget without raising taxes or changing the state's tax structure.

But they haven't detailed all the spending cuts they would make for that promise to become reality.

Budget experts expect revenue projections in 2011 will show the state's income to be as much as $3 billion lower than what it would take to cover spending for the state's current general fund budget of about $6.6 billion.

If that dire circumstance occurs, revenue projections would be about 55 percent of previous spending levels.

Sandoval and Reid have indicated they expect an economic recovery of some kind to help the state solve its budget woes.

But given that about half of the general fund revenue comes from sales taxes and gambling, and neither gambling nor consumer spending appears poised for a rebound, it would take a new tax structure, higher taxes on something or unprecedented spending cuts to make the 2011-13 budget balance.

"We have to start thinking about where we are today as being the new normal," said Jeremy Aguero, a principal at the economics research firm Applied Analysis.

Aguero says it is unrealistic to expect to avoid difficult choices in the near or long term, even if the economy rebounds. That's because the sectors that drove state revenue in the past are unlikely to return to their former glory.

"It is going to mean massive layoffs at the state and local level unless we find a substitute source of revenue," Aguero said. "It is not going to be about building hotel rooms."

Asked whether the pillars of the current tax structure might recover in time to fund a budget without painful cuts Aguero responded: "Not in the foreseeable future, it is not. And certainly not in the up­coming biennium and I wouldn't expect in the biennium after that."

Case closed

A lawsuit that pitted Nevada's pro-mining state statutes against its citizens' libertarian restrictions on eminent domain won't be argued in front of a jury.

That's because owners of the Big Springs Ranch and Fronteer Gold Corp. agreed to settle the case without a trial.

"It would have been a fascinating case to try," Elko County District Court Judge Andrew Puccinelli told the Elko Daily Free Press after the parties agreed to settle on Thursday.

In the case, Fronteer sought to condemn by eminent domain nearly 1,800 acres of the Big Springs Ranch, on some of which the Vancouver, British Columbia-based mining company has mineral rights.

It put the spotlight on laws dating back more than 125 years that say mining is of "paramount interest" to the state and has eminent domain rights similar to governments seeking to take land for public use.

The pro-mining law appeared to run counter to principles in the 2008 People's Initiative To Stop The Taking Of Our Land, or PISTOL, initiative.

Had it gone before a jury, attorneys for Big Springs from the law firm of Las Vegas lawyer Kermitt Waters, a major backer of PISTOL, would have argued on behalf of the ranch owners against the mining company's attempt to exercise rights from a law dating back to the 1800s.

The Elko Daily Free Press reported on the agreement to settle: "The portions of the settlement agreement disclosed in court state that Fronteer will purchase the entire ranch and water rights by Aug. 1 and the agreement 'resolves all disputes between BSR and Fronteer.' "

Fronteer reportedly had offered $12 million to Big Springs owners, which includes Las Vegas businessman Ray Koroghli.

Contact reporter Benjamin Spillman
at bspillman@reviewjournal.com
or 702-477-3861.