Special session opens in Carson City

CARSON CITY -- The 26th special session of the Nevada Legislature opened Tuesday with pomp, protests and promises by Democratic leaders to save schools and social services from deep cuts by imposing new fees on everything from casinos to banks to parks.

Senate Majority Leader Steven Horsford, D-Las Vegas, said the state is constitutionally responsible for providing education and protecting seniors, the mentally ill and the poor. But he said regulating companies and running public facilities shouldn't siphon off much-needed money from the general fund, which must provide basic citizen services.

"There are going to have to be additional revenue sources and fees" to help make up an $887 million budget shortfall without cutting education by one-tenth and laying off hundreds of teachers, Horsford said in an interview hours after the special session got under way.

Horsford's comments gave the clearest indication to date of how the Legislature plans to bridge the shortfall gap, one that Gov. Jim Gibbons proposed to handle mostly through spending cuts. The mining and gaming industries might be tapped to shoulder part of the burden through additional fees and proposed rollbacks in tax deductions.

Tuesday's session featured largely detailed testimony on the budget and showed just how far apart the Republican governor and Democratic leaders remain. Gibbons at one point called on his staff members and department heads to abruptly stop testifying, saying they were being "badgered."

"If you ask the same questions more than three times, that's badgering," said his spokesman Daniel Burns. "The governor is doing everything possible to work with legislators, but he demands courtesy."

Members of the governor's staff are ready to testify again today before the Senate and Assembly, but Gibbons will demand they return to his office if they are badgered, Burns said.

Horsford denied any harassment of State Budget Director Andrew Clinger and Health and Human Services Director Mike Willden.

"We were polite," he said, adding that he has great respect for Clinger and that lawmakers had praised Willden at the start of the hearing. Horsford said legislators owe it to voters to ask tough budget questions.

Much of the real work of the session is being done in caucus sessions outside of the public eye and in the hallways. And despite the public tension and rhetoric highlighting differences between the governor and the Democrat-controlled Legislature, lawmakers and their staffs were working behind the scenes with Gibbons' people to come up with a workable plan.

Horsford said he had ordered several bills to be drafted, the beginnings of the final product that both houses must approve.

Lawmakers in both parties have agreed to about half of Gibbons' proposed 10 percent spending cuts for nearly all state agencies, a plan he laid out in calling for the special session. But Democrats, Horsford said, want to restore $300 million to $400 million in education, social services and other items, requiring more revenue.

The Democratic leader said no percentage cut had been agreed on, but one source close to the private talks said the most optimistic scenario would be a 5 percent reduction to education.

Horsford said lawmakers already have gotten the governor to restore $27.8 million in "the worst of the worst" proposed cuts in programs for the mentally ill and seniors after headlines about limiting adult diapers, dentures and hearing aids drew public criticism. He said the special session is looking to restore more than $20 million, partly to ensure continuing federal matching funds for Nevada.

For education, the governor proposed K-12 cuts of about $175 million and higher education cuts of about $78 million, amounts Horsford said Democrats view as "not acceptable."

"We want to bring those numbers down below 10 percent and proportionally," the Senate majority leader said. "The challenge is we've got to also suggest how we'll pay for it."

Gibbons has suggested tapping the mining industry for up to $50 million in new revenue by limiting tax deductions. Democratic lawmakers and key Republicans agree with getting mining to pay more, but not necessarily as Gibbons proposed because of questions about whether his idea is constitutional.

Instead, a formula might be found to impose new fees. Also, the mining industry might be asked to pre-pay taxes or voluntarily contribute up to $100 million, sources said. Senate Minority Leader Bill Raggio, R-Reno, said the mining industry on March 1 expects to report an extra $50 million to $60 million in unexpected revenue to the state because of rising gold prices, which are more than $1,100 per ounce.

Horsford confirmed that gaming would be asked to pay for its regulation by picking up some Gaming Control Board costs, up to $64 million over the two-year budget period. He said such agencies should be "self-sustaining" and not "subsidized" by the general fund, estimated at $6.9 billion for the budget period ending June 30, 2011.

"Other businesses need to be part of the solution," Horsford said, noting lawmakers were looking beyond mining and gaming.

He outlined other ideas for new revenue, including the following:

■u2002Leasing state buildings, a proposal from Raggio that could raise $250 million. Raggio is key to gaining enough Republican support for any final plan.

■u2002Expanding a foreclosure mediation program -- now just for single-family homeowners -- to private businesses and charging a $500 fee to banks when they file a foreclosure notice. That charge could raise $40 million.

■u2002Levying higher user fees for state parks instead of closing them, which could raise $5 million a year.

■u2002Calling for a tax amnesty period to allow businesses and people to pay the taxes they owe the state without penalties. Gibbons collected $41 million on a similar program two years ago.

■u2002Collecting $90 million or more in overdue taxes by beefing up the auditing staff at the state Division of Insurance and inducing the Taxation Department to increase collection efforts for more than $100 million in other overdue taxes.

Horsford sounded positive about reaching agreement among lawmakers for a budget plan but suggested Gibbons might veto the final bill if it contained too many fees that critics equate with taxes.

"We started with the full intention of trying to reach a consensus that could be agreed to with this governor," Horsford said. "Unfortunately, based on his own philosophical views, pledges and political determinations I don't see how we are going to get there."

Gibbons repeatedly has vetoed tax increases and has characterized many types of fees as taxes, which is why lawmakers were working to get veto-proof support in the Senate, where there are 12 Democrats and nine Republicans. It takes a two-thirds vote in both houses to override a veto. In the Assembly, there are 28 Democrats and 14 Republicans.

"Whether or not they agree to our plan, the Legislature will do its job because we have a duty in this special session to make the difficult decisions," Horsford said, referring to the governor's office. "We can't balance the budget on the vulnerable, on those who have the least ability to advocate for themselves and on education."

Lawmakers met for about six hours in open session Tuesday, from 9 a.m. to about noon and then from 3 to after 6 p.m., with private Democratic and GOP caucuses held before and after the formal gatherings.

Horsford warned members that they will be meeting in the evening in an attempt to finish business as quickly as possible.

"My daughter's third birthday is March 1, and she said, 'Daddy will you be home by my birthday?'" he said in opening the session.

Horsford said he told her, "I hope so."

Before the special session began, 50 students from the College of Southern Nevada and the University of Nevada, Las Vegas, protested outside the Legislative Building, wearing yellow "S.0.S." T-shirts and shouting, "Save our schools."

Horsford invited them to speak before the Senate began discussing bill proposals. Several took him up on the invitation.

On the Senate side, the special session opened with the swearing in of Republican Stan Olsen of Henderson to serve as the appointed senator in the place of Warren Hardy, R-Las Vegas, who had resigned.

On the Assembly side, Speaker Barbara Buckley, D-Las Vegas, opened with a speech saying she is confident lawmakers can "meet the challenge" of balancing the budget without harming schools.

"Our education is our future," Buckley said. "Our children will never recover if we cut back their educational opportunities."

She finished after speaking only a few minutes, saying the special session should not last more than a few days and is not a place for long speeches, "So let's get to work."

Gibbons agreed, telling a group of Assembly leaders who walked to his office to inform him ceremoniously the session had started that "we're ready for business."

The contingent included Assembly Majority Leader John Oceguera, D-Las Vegas; Assembly Minority Leader Heidi Gansert, R-Reno; and Assemblyman Kelvin Atkinson, D-North Las Vegas.

Before the session opened, Gibbons said he would amend the agenda to include language Democrats support to let the state apply for $175 million in federal education money. He also proposed changing a state law on water rights, a response to a Supreme Court case.

Gibbons said he wants the Legislature to amend a 2003 state law that prevents school districts from evaluating teachers on how their students fare in standardized tests.

By changing the law, the state could apply for a Race to the Top education grant, but there's no guarantee it would receive it.

Legislators already had developed language to amend the law and were surprised when the governor didn't initially include the Race to the Top matter in his proclamation calling the Legislature into session.

On the water issue, Gibbons wants 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 multimillion-dollar pipeline to bring water into the Las Vegas Valley.

The start of the session also saw the heat turned up in the feud between Raggio and Gibbons at a time when the legislative and executive branches are struggling to balance the budget. Raggio responded strongly to statements from Gibbons alleging that Raggio didn't attend meetings the governor held in advance of the ongoing special session of the Legislature.

"Either the governor's memory is failing, or he has been misinformed or he is I think distorting the facts," Raggio said.

Gibbons had spoken early Tuesday during the taping of the political interview program "Nevada Newsmakers." During the taping, Gibbons said Raggio "never showed up most of the time on a lot of these meetings."

After a meeting of Senate and Assembly Republicans, Raggio said he attended two meetings in the governor's office in which Gibbons was present and one in which Gibbons wasn't present. Raggio said there were five other meetings in the Legislative Building that included the governor's staff, fiscal staff and legislators.

"I was present for all of them, and the governor was present for none of them," Raggio said.

Raggio insinuated Gibbons was on the attack because Raggio backs Brian Sandoval, Gibbons' rival in the Republican primary for governor.

"I don't understand why he wants to pick a fight with me on something of this nature, unless it is political because I happen to be supporting one of his opponents in the primary," Raggio said.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901. Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861. Contact reporter Laura Myers at lmyers@reviewjournal.com or 702 387-2919