Session adjourns with balanced budget deal approved in Carson City

Lawmakers overwhelmingly approved a balanced budget deal with Gov. Jim Gibbons early Monday, adjourning a special session at 2:13 a.m. on Day 7 after a week of hard bargaining. The plan imposes a range of fees on industries such as mining and banking and strikes a compromise in which all sides gave up something.

Final passage of the budget bill came after an initial 11:59 p.m. Sunday deadline set by Gibbons to adjourn passed. He signed a proclamation extending it until 5 p.m. Monday, although lawmakers said he didn't have authority to tell them when to finish.

The rare bipartisan accord between the Republican governor and the Democrat-controlled Nevada Legislature closes an $887 million gap in the $6.9 billion general fund budget through June 30, 2011. The approved budget bill now goes to the governor to sign into law.

It followed several days of marathon closed-door talks between Gibbons and lawmakers. The governor warned Republicans not to make any more concessions. And Democrats ostracized members of their own party who suggested raising taxes.

The breakthrough agreement is in contrast to the past sharp division between Gibbons and lawmakers in 2009 when the governor vetoed a record number of bills and lawmakers overrode him 25 times.

"Everyone had to yield something and everyone came to the table with the idea we were pulling together," Gibbons said during a news conference with lawmakers in front of the Legislative Building.

State Senate Majority Leader Steven Horsford said both Democrats and Republicans compromised in order to seal the deal.

"There are certain parts of this plan each one of us don't like," said Horsford, D-Las Vegas.

Assembly Speaker Barbara Buckley, D-Las Vegas, said lawmakers and the governor were intent on fixing the worst budget crisis in state history, although what was agreed on is a temporary solution.

"We came from different philosophical backgrounds but we came together to reach a consensus that is good for Nevada," she said.

State Senate Minority Leader Bill Raggio, R-Reno, agreed there were major philosophical differences and the budget cutting wasn't pleasant.

"There is going to be some pain out there," said Raggio, who set aside personal problems with the governor to reach a deal.

Bleary-eyed senators struggled to keep awake before passing the budget bill by 20-1 vote at 1:45 a.m. Monday, with all nine Republicans joining 11 of 12 Democrats in the Senate.

"It does not reflect what all of us wanted, but reflects the economic reality we face as a state," said Horsford. "We were able to bring down the cuts to the most essential areas and preserve our commitment to health care, education and public safety."

The lone "no" vote, Sen. Bob Coffin, D-Las Vegas, complained that a small group of leaders worked in private on the bill and then brought it out in the open as a completed bill ready for other legislators to pass.

"I don't think we are in balance," said Coffin who spoke for 24 minutes as the clock ticked away and other senators looked on incredulously. "It is our duty to have a balanced budget. It would have taken a tax increase. It is obviously we didn't tax enough last session. We put the future of Nevada in jeopardy for lack of nerve."

Earlier, at 12:37 a.m., the Assembly voted 34-8 for the bill, with opposition coming from Republicans who opposed some fee hikes.

Assembly Minority Leader Heidi Gansert, R-Reno, voted in favor of the measure, saying the weeklong process was grueling.

"It seemed like an insurmountable task. I don't know how we were going to get this done," Gansert said. "We've spent some time really rehashing the entire budget in a very short period."

The plan to fill the budget gap would cut state spending by about $300 million, or about 10 percent across virtually all state agencies.

Most state offices would be closed on Fridays with government employees shifting to a four-day, 10-hour-a-day workweek.

State spending on education, however, was spared the deepest cuts and instead the deal resulted in a 6.9 percent reduction in state support for both the K-12 and higher education systems.

Social programs were kept largely intact with first Gibbons and then lawmakers restoring $50 million in funding that the governor had originally intended to cut. The moves came after headlines about limiting dentures, hearing aids and adult diapers for seniors highlighted the severity of the attempt to trim services for the most needy.

New revenue to balance the budget includes $197 million from a sweep of state agency funds, $105 million in federal funds and $62 million in unexpected mining proceeds thanks to the high price of gold.

The plan also calls for a range of new fees, including on mining claims, applications for water rights and new gaming licensees, bank foreclosures and parks for a total of more than $50 million.

The Nevada State Prison, targeted for closure by the governor to save $13 million, will remain open, saving 136 jobs as well.

During the special session, Gibbons several times threatened vetoes if the budget plan included new taxes or fees that the targeted industry didn't agree to, but in the end he accepted most of the Democratic ideas except for $32 million in new revenues from casinos.

The gaming industry refused to go along with funding the Gaming Control Board, and so it was dropped from the final budget bill.

State Sen. Randolph Townsend, R-Reno, said Gibbons, who was often accused by legislators of being distant and removed from the legislative process in past sessions, was animated and forceful in the late-night meetings with state Senate and Assembly Republicans.

Townsend said Gibbons told lawmakers, "You have no idea how hard some of these concessions have been."

Once the governor signed onto the plan, he warned the Republican caucuses not to give in to any more Democratic demands: "This is the deal. The deal won't be changed," Townsend said the governor told them.

Assembly Majority Leader John Oceguera, D-Las Vegas, spent the frantic final hours before the final deal was announced working on the mining issue after rural lawmakers and Gibbons complained it didn't do enough to protect small "mom and pop" miners.

Oceguera rushed between the offices of Buckley and Raggio using back hallways and stairwells to avoid curious reporters and he held private conversations with mining lobbyists as well.

The result was a three-tier system with no fee for people who have one to nine claims, a fee of $70 per claim on someone with 10 to 199 claims, an $85 per claim fee on claims from 200 to 1,299 and a $195 per claim fee for people with 1,300 or more claims. The mining fee is expected to generate $25.7 million in new revenue.

As the budget deal took shape, both Republican and Democratic lawmakers were questioning the credibility of some numbers as they shifted in an end of session "fuzzy math" blitz of changes.

One Democratic senator said numbers crunchers "invented" $5 million by increasing the amount available from the collection of outstanding insurance premium taxes to $10 million. Insurance commissioner Scott Kipper originally set the figure at $5 million.

To avoid any budget bobbles that could spoil the final package, Democratic leaders Horsford and Buckley kept their caucuses in line and didn't allow for much dissent on the developing plan.

State Sen. Bob Coffin, D-Las Vegas, said he was ostracized from the "core group" of bargaining legislators when he suggested the state needed to raise taxes to balance the budget with reliable revenue.

"The honest way to do this is to raise taxes," said Coffin, a 28-year member of the Legislature.

Asked how his stance affected his access to the group during the special session, he said: "I'm not part of the group anymore."

Lawmakers continued to work on other issues during the day while the budget bill was drafted.

The special session concluded without completing work on a controversial water rights bill, running out of time.

On the water issue sought by Southern Nevadans, Gibbons wanted legislators to revise a law that prevents the state engineer from considering some old water rights applications.

In a recent decision, the state Supreme Court said the engineer could not act on water rights applications filed by the Southern Nevada Water Authority, which is seeking approval to pump water from rural Nevada to Las Vegas.

The water authority has bought water rights from ranches in White Pine and Lincoln counties and wants to build a multibillion-dollar pipeline to bring water into the Las Vegas Valley.

Legislators voted early Monday to approve a bill they say could create thousands of jobs through road construction.

Assemblyman Kelvin Atkinson, D-North Las Vegas, crafted the bill to use a portion of an existing gasoline tax and a portion of existing sales tax to build roads.

The Senate approved the bill 21-0. The Assembly voted 37-5 in favor. A senior member of Gibbons staff said the governor would likely support it.

Sunday wasn't all hard work.

Legislators, lobbyists and some of the press spent the afternoon like many Americans: huddled around their television sets watching the Canadian and United States men's hockey teams play for the Olympic gold medal in Vancouver, Canada.

When the U.S. team tied the score at 2-2 in regulation time, the Legislative Building literally shook with shouts. If there ever was a louder cry of joy in the Legislature, then no one remembered it.

Moments later, the atmosphere was much more subdued when the Canadians scored the winning goal in overtime.

People with Canadian backgrounds kept quiet.

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919.