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Agencies asked to add to cuts

CARSON CITY — In a sign Nevada’s budget crisis might be worse than the most pessimistic projections to date, state Budget Director Andrew Clinger has asked the heads of state agencies to submit plans for additional budget cuts of 4 percent “for discussion purposes only.”

The budget director’s request Wednesday came as Gov. Jim Gibbons, lawmakers and state officials continued to disagree on the severity of the budget shortfall the Legislature will address in a special session scheduled to start Monday.

The request came days after agencies were asked to submit cuts of only 2 percent.

Were there to be a round of 4 percent cuts to the current two-year spending plan — combined with the 4.5 percent cuts implemented by most state agencies and public education earlier this year — it would generate $128 million in savings. That is far more than the $60 million to $90 million shortfall Gibbons cited in calling for the special session.

One source close to the governor said the shortfall is now estimated at $243 million.

But Democratic lawmakers called the $243 million figure inflated. And Assemblywoman Sheila Leslie, D-Reno, said the shortfall is probably closer to $128 million.

“Everybody’s throwing numbers around. Nobody knows for sure,” said Leslie, the Assembly majority whip. “We’re very frustrated. Why are we going into a special session when we don’t know what the number is?”

A briefing by Clinger on the latest shortfall estimate, scheduled for Wednesday, was canceled because the Gibbons administration and fiscal analysts with the Legislature remain at odds on the size of the shortfall.

Gibbons spokesman Ben Kieckhefer said he does not know how wide the disparity is, but some estimates “are substantial.” He would not confirm the $243 million figure.

In preparing for the special session, Gibbons will rely on the revenue estimate provided by the Economic Forum on Friday, Kieckhefer said. The panel is composed of Nevada business and fiscal experts. Five of the six members are new.

Leslie said legislative fiscal staff is completing its own estimate of the shortfall.

“We will rely on their figure, not on the budget director or the Economic Forum,” Leslie said. “I think it is a little more than $100 million.”

As fiscal analysts for the governor and for the lawmakers continue to go over the numbers, the gap will shrink. But the dollar amount must be agreed upon quickly so that legislators and the governor know how much money must be cut out of the state budget through mid-2009.

Leslie, in a letter hand-delivered to Gibbons, criticized the decision to bring in the Economic Forum because of a lack of time to prepare adequate information to present to the panel.

The governor and Legislature are required to use the forum’s projections during regular legislative sessions.

“You will be asking the Legislature to make decisions about budget cuts that will impact the lives of Nevadans and will have ramifications for our state for decades, based on these hastily determined projections,” Leslie said.

Meanwhile, state Treasurer Kate Marshall, in a letter to the governor Wednesday, said there is enough money in state coffers to cover expenses at least until the 2009 Legislature meets in February. Nevada will have at least $200 million on hand and up to $245 million, assuming the 4.5 percent in state agency cuts approved in January and the additional 2 percent cut the governor proposed last week are carried out, Marshall said.

Marshall did not dispute the need for a special session but suggested the most controversial plans being discussed for the session, including canceling a 4 percent pay increase due July 1 for state employee and teachers, might be avoided.

It “would be prudent” during a special session, Marshall said, to take $200 million from the state’s $267 million rainy day fund to assure the state has sufficient cash on hand to pay bills between now and February. Such a move would be routine and could be adopted quickly because Gibbons and legislators already have agreed to tap the fund when the Legislature goes into regular session in February.

Marshall warned that her recommendations were based on last week’s shortfall estimates and that “any slight change” could “significantly impact” the situation.

Kieckhefer rejected any suggestion that Gibbons is “cooking the numbers” on the budget shortfall.

“Look at whose side history is on this issue,” he said. “The governor was criticized when he first proposed a cut of $200 million. Now it’s a billion.”

Gibbons and the Legislature have come up with $913 million in cuts and other options to balance the budget, including tapping the rainy day fund.

Gibbons will outline in a Sunday televised address the amount of the shortfall and his plan to deal with it, Kieckhefer said. The Legislature then can use Gibbons’ recommendations or craft its own solutions during the special session.

A proclamation calling lawmakers to the capital will not limit the options lawmakers can pursue, Kieckhefer said. That is not to say Gibbons will approve a tax increase, but lawmakers can override a veto of a tax increase with a two-thirds vote in each house, he said.

One partial remedy to the shortfall was announced Wednesday by Corrections Department Director Howard Skolnik, who said he is in the planning stages to shut down the Nevada State Prison, located in the capital.

Another 4 percent cut to his budget would require a facility closure, he said. Closing the prison would save $19 million a year.

“We’re planning for it,” he said. “We met with the staff … to let them know it’s on the table.”

Slowing inmate population growth makes the closure doable, he said, but the closure will depend on what the Legislature does next week.

Officials would need about six months to close the facility, and only about half of the $19 million could be saved in the current budget, Skolnik said.

The Nevada State Prison has been in continuous operation since 1862, when the Nevada Legislature purchased the Warm Springs Hotel and 20 acres of land for $80,000.

The prison houses about 900 inmates and is the site where executions are carried out.

Skolnik said a new prison in design for Southern Nevada includes an execution area. If an execution must be carried out before the facility opens, the portion of Nevada State Prison used for this purpose would be reopened, he said.

About 200 jobs would be eliminated if the closure occurred, Skolnik said.

A measure passed by the 2007 Legislature increasing the good-time credits given to inmates serving time for non-violent crimes has made the closure possible, he said.

In her letter to Gibbons, Marshall offered suggestions for trimming spending, saying the state could save $18 million a year by eliminating overtime for state employees and $6.3 million by halting almost all in-state travel.

The Associated Press contributed to this report. Contact Review-Journal Capital Bureau chief Ed Vogel at evogel@reviewjournal.com or 775- 687-3901. Contact Review-Journal Capital Bureau reporter Sean Whaley at swhaley@reviewjournal.com or 775- 687-3900.

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