State lawmakers wrapped up another budget-balancing special session Monday night by warning taxpayers that they are out of duct tape and bailing wire — that they cannot possibly reduce spending by another dime if tax revenues continue their nosedive.
"There will be no more Band-Aids left," Assembly Speaker Barbara Buckley, D-Las Vegas, said of $340 million in new adjustments.
Of course, the same somber assessment was made this fall. And after a June special session that put the brakes on $275 million in new spending. And more than a year ago, when the state’s economy showed its first signs of slipping.
The next round of "Draconian cuts," replete with all manner of suffering, is not humanely possible, we’re told. And yet resourceful lawmakers always find a way to balance the books without inflicting the fiscal bloodbath they foretold.
On Monday, the Legislature secured a $160 million line of credit, redirected almost $77 million from the reserves of more than a dozen agencies, cajoled the mining industry into paying $28 million in taxes in advance, kept $1.8 million promised to rental car companies to register their fleets, and cut a tax collection allowance for stores that sell cigarettes or liquor by $3 million.
The only actual cuts administered to state agencies totaled $72.8 million.
Lawmakers and big-government sympathizers will now lament that about $1.5 billion has been "cut" from the two-year, $6.8 billion budget approved in 2007. That’s not true.
Because of the recession, nearly all tax collections are down, leaving the state with a revenue shortfall of about $1.5 billion. But lawmakers emptied the state’s rainy day fund of nearly $270 million to cover some spending, including 4 percent pay raises for all state workers. The Legislature has tapped trust funds, borrowed from the Local Government Investment Pool and left some 2,700 state jobs vacant to preserve hundreds of millions more dollars in general fund expenditures.
The state has laid off only 35 workers this year, a work force reduction that pales in comparison to the tens of thousands of job losses in the private sector.
In all, far less than $1 billion has actually been trimmed from the budget, and most of those cuts have targeted one-time expenditures, such as furniture, computer and supply purchases. Only $400 million in operating costs have been cut, according to state Budget Director Andrew Clinger.
"No, we haven’t cut $1.5 billion from the budget," Mr. Clinger said Tuesday.
To be sure, it is becoming increasingly difficult for legislative Democrats to argue that the state is at the brink of social disaster — none of their previous forecasts have come true.
Gov. Jim Gibbons said he will present lawmakers with a 2009-11 budget that does not raise taxes and does not cut services further. He also said he will order a wage freeze for the next two years. Good.
But it will be interesting to see if Gov. Gibbons can keep his promises. Because despite the governor’s "no new taxes" pledge, the $1.8 million taken from the rental car industry is obviously a tax increase — these businesses will have to make up the loss of those funds through increased charges to consumers. And Democrats who now control both houses of the Legislature are increasingly desperate to jack up broader levies, especially now that they have put the state in debt to cover operating costs. A decent chunk of next year’s budget pie has already been spent.
The 2009 regular session may well see populist Democrats seek to hammer businesses with higher taxes under the guise of helping working Nevadans or preserving the state’s quality of life — even though many businesses "are hanging on by a thread," according to Ms. Buckley.
"I think it’s time to start raising revenue," said Assemblywoman Peggy Pierce, D-Las Vegas.
No, it’s time for taxpayers and employers to start raising a stink.