Special session on the budget

Democratic politicians and their fifth columnists in the press have spent the past six months ridiculing Republican Gov. Jim Gibbons in increasingly shrill terms, portraying the governor as a mental midget incapable of leadership, too distracted by a pending divorce to deal with reduced state tax collections caused by high energy costs and a collapsing housing market.

What do they really have against Jim Gibbons? Probably this: He ran for office on a vow not to raise taxes, and now he insists on running the state as though voters expect him to keep his word.

Flustering critics who apparently expected him to ritually disembowel himself when his defeated opponents called him names, Gov. Gibbons has now calmly called a special session of the Legislature to deal with the fact that tax revenues for the current two-year cycle are expected to fall almost $1.2 billion lower than the $6.8 billion hoped for only one year ago -- $250 million too low for the state budget to be balanced without further action.

Democratic legislators really, really don't want to go to Carson City for that special session -- though the law requires them to attend once called.

Why don't they want to go? Because Gov. Gibbons appears quite likely to give them a choice: Cancel the proposed 4 percent cost-of-living pay raises for state employees -- making public employees share some of the pain of the taxpayers who fund their salaries -- or else face layoffs.

The Democratic legislators -- and it appears we may have to wrap Republican state Sens. Joe Heck and Mark Amodei into the group -- don't want to have to make that choice, which could earn them the ire of a class of bureaucrats who have been allowed to become the proverbial tail that wags the dog.

Lawmakers were warned not to "grow" government to the hilt during the fat years. They never listen.

Like spoiled children, legislators would now prefer that Gov. Gibbons make this decision -- so they can be spared any blame, instead returning to their pattern of criticizing him no matter what he does.

As late as Friday morning, state Democrats were insisting no more major cuts -- and thus no special session -- were needed, because the additional budget shortfall was going to be only $60 million. This rosy scenario was based on legislative estimates that sales tax revenues would climb by 3 percent next year. (The governor and his budget staff had been predicting sales tax revenues might actually fall by another 3 percent.)

Given that every attempt to estimate the size of the slump over the past six months has underestimated the swelling red ink gulf, which set of figures more closely resembles the wishful thinking processes of someone supposedly "distracted and challenged"?

Friday, the state Economic Forum -- charged by law with developing the tax estimates to be used in setting the state budget -- answered that question, coming down firmly in line with Gov. Gibbons' unhappy but far more realistic estimate of the red ink to come.

The Economic Forum looked at figures from the state Budget Division that project state unemployment will climb to 5.6 percent this year and 6 percent next year. (It's 6.2 percent right now, but the forum deals in year-long averages.) The Budget Division on Friday also projected the housing slump will continue and that retail sales will drop -- by 2.9 percent this year and 4.4 percent in the fiscal year beginning July 1.

Taking those gloomy numbers into account, the Economic Forum ruled the governor is right -- sales taxes will decline by 3.6 percent in the next fiscal year; gaming revenues will climb only 2 percent -- not the previously hoped-for 7.2 percent.

The forum thus projected the state budget shortfall will be close to $250 million -- much closer to the estimate of the governor's staff than to the more optimistic estimate of the "please-don't-drag-us-to-Carson-City" legislators.

(On top of that, Taxation Department Executive Director Dino DiCianno warned the Economic Forum that state and local governments now face upward of $150 million in refunds to casinos and restaurants as a result of a recent Nevada Supreme Court decision in a tax case involving comped meals to patrons and employees.)

On Friday afternoon, the governor delayed the start of the special session from June 23 to June 27, to give both budget and legislative staff enough time to crunch these new -- if sobering -- numbers.

How strongly are the legislative water carriers for the state employees averse to telling those bureaucrats -- still enjoying vacation, benefit and pension plans private-sector taxpayers can only dream of -- that they'll have to wait a few years for their next "cost-of-living" raise (while still collecting their annual "step" raises of about 5 percent?)

Can the Democrats -- perhaps abetted by not-so-Republican state Sens. Heck and Amodei -- cobble together a veto-proof two-thirds majority to raise taxes on Nevada's already overburdened private-sector workers in order to spare their public employees the need for any belt-tightening? Or will they opt to do nothing, washing their hands like Pilate and leaving the governor no option but to start announcing layoffs?

Governing is about making the tough choices. The supposedly inept Jim Gibbons -- too distracted to lead, if we listen to the braying of his detractors -- seems perfectly willing and able to do so, with calmness and deliberation.

What about the Legislature? Like Oscar Wilde dealing with the urge to take some exercise, will they now "lie down until it passes"?