Reaction cool to budget plan

CARSON CITY -- If it comes down to having his salary cut by 6 percent or seeing some of his co-workers laid off, then 12-year state employee Phil Watson said Monday the choice would be easy: He'd take the pay cut.

"We were talking about it at the office on Friday. No one wants layoffs. But is it really only a choice between salary cuts or layoffs? I think there are other alternatives. There is a choice to find revenue sources. You can't just pull that off the table."

Not one of the 20 people interviewed Monday in front of the Capitol, the Legislative Building and at businesses in the capital city expressed even lukewarm support for Gov. Jim Gibbons' proposed $6.17 billion budget for the 2009-10 and 2010-11 fiscal years. Half of those interviewed were state employees or teachers. Two were college students and the rest senior citizens.

One thing they all agreed upon, however, was they would support higher taxes if that means that state services can be maintained at current levels.

But the kind of taxes most of these citizens suggested -- on mining and businesses -- are taxes that they themselves would not have to pay directly. However, they did say they also would support increases in the "sin taxes" on such things as alcohol and cigarettes.

Gibbons' budget calls for a 6 percent salary cut for state employees, including teachers and Nevada System of Higher Education employees, along with reductions in health care benefits and the end to 3 percent to 4.5 percent annual step pay increases.

Even harder hit, however, would be the universities and colleges. Gibbons proposes to cut their support by 36 percent of what the state contributed to the system two years ago, including reducing half the support for the University of Nevada, Las Vegas and the University of Nevada, Reno.

Without the wage and benefit cuts, Gibbons said "thousands" of employees would be laid off.

His budget director, Andrew Clinger, estimated that between 9,000 and 11,000 employees will lose their jobs if wages are not reduced.

Already the state has kept 2,700 jobs vacant through a hiring freeze and has recommended eliminating 1,400 of those jobs permanently.

The administration estimates it would need $8 billion over the next two years to avoid pay cuts and keep services at the level estimated when the Legislature adjourned in June 2007.

While the governor reiterated his opposition to tax increases in his State of the State address Thursday, his budget does include a tax increase -- a $292 million increase in room taxes.

It also includes grabbing $79 million in property taxes from Clark and Washoe counties and taking an additional $31 million from the gaming industry.

Ann Kruger, a 28-year schoolteacher, said Monday she doesn't believe the message Gibbons is sending out is fair to employees.

She said the administration is trying to make it sound like legislators have only a "Hobson's choice" between cutting salaries or laying off employees.

She said Gibbons is putting out the impression that state employees are so greedy that they object to taking a pay cut even if others would lose their jobs as a result.

Kruger said the budget cuts and other reductions would reduce her income by about 10 percent.

"We're frugal. We can get by even if our pay is cut," she said.

But she worries about teachers and newer state employees. According to her analysis, they face making do with 12 percent to 13 percent less if Gibbons' plan receives final approval.

They not only would have to absorb the 6 percent wage cut, but a $110-a-month increase in health care policy premiums and the end of annual step increases.

If they are earning salaries in the $30,000 to $40,000 a year range, that level of cuts would be extreme, she said.

"There are a lot of divorced people in this town," Kruger said. "There are a lot of families headed by single people. What about them?"

UNR economics senior Corrina Cohm has a different take. She can accept the pay cuts, but believes Gibbons' plan to cut state support to higher education would devastate Nevada for decades.

"If I were a good student graduating from a Nevada high school today, I would be considering going to college in another state. Who knows whether our colleges will be accredited after these cuts? It is going to decrease the motivation for kids to go to college."

Cohm, 33, worked as a software designer during the dot com boom and was laid off when the market crashed.

As a result, she is not opposed to the salary cuts. She doubts whether state employees and teachers realize the extent of the hardships faced by businesses today.

"I am not saying state workers don't live in the real world, but the fact they have to take a 6 percent cut is not a big deal. That's how it is today," Cohm said.

World War II veteran Jim Knister and Korean War veteran Bill McCord both are in their 80s. They hardly are typical senior citizens.

They held signs along U.S. Highway 395 on Monday calling for the United States to end the war in Iraq and bring the troops home.

They also said they did not like what they heard from Gibbons in his State of the State address.

"He's a rigid man," Knister said. "He says he cannot raise taxes. Conditions change. You can't always be consistent. I'd rather pay more than see people laid off, see people hurt."

Knister is convinced that Assembly Speaker Barbara Buckley and others are right in their belief that state government must overhaul its tax structure and devise a way to deal with budget shortfalls during recessions.

"I am not opposed to higher taxes," added McCord, a combat veteran who became a Methodist minister. "We need schools, we need universities, we need public safety. We have to find a way to pay for them."

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.