Nevada confronts more cuts

CARSON CITY -- Lawmakers faced with the dismal prospect of major cuts in the upcoming two-year state budget will first have to whack as much as $250 million out of the current spending plan, officials learned Monday.

The Economic Forum, a panel charged with the task of projecting state tax revenues for the 2009-11 budget, declined to make any decisions on the new spending plan at its all-day meeting in the capital. It must make those decisions by Dec. 1.

But it did revise its projection downward for tax revenues for the current fiscal year that began July 1, and the news wasn't good.

It made a preliminary projection of about $2.4 billion in major gaming and sales tax revenues for this year, down $165 million from its projections in late June.

When revised projections for smaller tax revenues and fees are included, the new revenue shortfall hits $203 million. Adding in a third element -- a lower estimate of "reversions," which are monies returned to the general fund that were appropriated but not spent by state agencies -- the number hits somewhere around the $250 million mark.

The new shortfall will require further cuts of as much as 8 percent in the current budget, state Budget Officer Andrew Clinger said.

If forecast to the coming two years of the new budget, cuts of as much as 30 percent could be required, he said.

So far, Gov. Jim Gibbons has asked for cuts of only 14 percent for the coming budget.

The lower revenue projection means bigger cuts to the current budget, which has already seen $1.2 billion in reductions and fiscal maneuvers to keep it balanced, including the use of the state's entire $267 million rainy day fund.

"It's (the new projection) within the range of what we thought, but obviously it's pretty far off from what he had projected in June," Clinger said. "A lot has happened since June."

The numbers could change slightly when the forum makes a final determination at its next meeting.

Clinger said he could not comment on whether the newest shortfall would prompt Gibbons to call yet another special session of the Legislature. He already called lawmakers to the capital in June in a one-day session to deal with a $275 million shortfall.

The Legislature is not set to convene until February but Assembly Speaker Barbara Buckley, D-Las Vegas, said last week she wants to get an early start on a budget review, possibly beginning later this month.

"We don't know yet what we're going to do," said Ben Kieckhefer, press secretary to Gibbons, after the forum announced its finding. "There is no point in calling a special session if you don't know what you are going to do."

Deputy Chief of Staff Mendy Elliott said Gibbons is concerned about the new revenue estimates and said any further budget cuts will not be implemented on an across-the-board basis but will be targeted. The Department of Health and Human Services, for example, will see an increased demand for services because of the poor economic conditions, she said.

Gibbons knows that he and the Legislature will have to work together to resolve this fiscal crisis, Elliott said.

The major revenue estimate of $2.4 billion set by the forum for this year was lower than any of the projections offered by legislative staff or Clinger's office.

Forum panel member Michael Alastuey said the decision to go lower than any staff recommendation gave him pause, and he voted against the motion. It passed on a 4-1 vote.

The decision to lower the estimate came after the panel heard more dismal news about Nevada's housing, employment and gaming markets from state officials and a national consultant.

Forum panel member Bill Hartman said he does not believe the state economy will recover until the second year of the new budget, which begins July 1, 2010.

"We're going to be in this recession for a while," he said.

Contact Capital Bureau reporter Sean Whaley at swhaley@reviewjournal.com or 775-687-3900.