November 28, 2008 - 10:00 pm
Let’s not downplay the state of affairs. Nevada is in big trouble. It’s in a financial tailspin.
This may not be apparent to some of you reading this column on Black Friday, when thousands of people are rising early to line up for bargains at the valley’s assorted shopping emporia.
But don’t be fooled by those freakish flocks of holiday consumers. The numbers don’t lie. The casinos are hurting. Retail sales are shrinking. Real estate is close to the bottom. The construction industry — except for CityCenter and some annoying road projects — is almost nonexistent. The county hospital is in the ICU. Thousands have been laid off across the state, resulting in rising demand for social services, publicly and privately provided. And most informed observers believe it will get worse before it gets better.
Gov. Jim Gibbons has called a special session of the state Legislature for Dec. 8 and 9 to deal with a $330 million shortfall. That’s small change in, say, California, which is billions in the hole. But in Nevada, $330 million is big money — and it comes on top of $1.2 billion that’s already been cut.
Slicing that kind of cash out of the state budget is painful. It’s more than painful, actually. Getting punched in the mouth is painful. Having your arm sawed off without anesthesia is more like what Nevada faces.
I don’t envy the arm-cutters who will gather in Carson City early next month.
Naturally, tons of ideas to “solve” Nevada’s budget crisis are being thrown at the wall. Some are good, some are questionable and some are just goofy.
For example: You gotta love the local curmudgeons calling for the heads of school district administrators. Don’t you know the Clark County School District would have all the money it would ever need if it would only fire a couple layers of do-nothing administrators?
To be fair, the district probably could lop off a handful of administrative heads and few would notice. But the notion that this would solve the district’s severe budget problems is just wrong and lacking in perspective. The scope of the budget problem dwarfs the perceived bureaucratic excess.
One thing is clear about Nevada’s budget crunch: There are no simple answers. Do you cut programs or do you raise taxes? Common sense suggests you do some of both. Even Gibbons, who previously pledged to never, ever raise a tax, has opened his mind to the possibility of employing both methods of balancing the budget.
OK, so what programs do you cut and what taxes do you raise? This is where it gets difficult. When “everything’s on the table,” as lawmakers are fond of saying these days, where do you start?
Jim Rogers, chancellor of the Higher Education System of Nevada, is the king of ideas, most of them centering on ways to avoid cutting college and university budgets. This is a good thing, this public brainstorming.
Rogers’ sprawling plan includes imposing a business income tax, raising the mining tax, eliminating tax loopholes for new businesses, issuing state bonds, hiking tuition fees and, last but not least, securing a $3 billion federal bailout.
You read that right: $3 billion. Why not? Rogers argues that all states facing big deficits should be eligible for federal aid. After all, if the arrogant jerks on Wall Street are handed billions of dollars, why not the more humble states of the Union? Let’s not forget that Nevada was on the right side in the Civil War, helped win the Cold War and has been America’s favorite playground for decades.
Another idea machine is Assembly Speaker Barbara Buckley, D-Las Vegas, whose mantra is financial stability. Among other things, she wants the state’s “rainy day fund” to maintain a healthy balance. Seems reasonable.
Way back in September — two months ago — Buckley said she had no appetite for raising taxes as part of her plan. But today, as the national and state economies slide downhill, one has to believe this vow is out the window.
My two or three cents on the subject:
— Don’t cut education. Nevada has woefully underfunded education for its entire 144-year history. We must invest more in education, not less.
— Lawmakers shouldn’t be scared to death of raising taxes. Nevada’s tax burden is the nation’s second lowest, according to the nonpartisan Tax Foundation. This sounds great on the surface but it crassly ignores the significant social costs. Ideologues aside, most Nevadans understand that maintaining the many facets of a decent state requires adequate funding.
— Lawmakers should consider temporary tax increases to address the budget crisis. What about a big infusion of tax revenue from the international mining conglomerates that would sunset or diminish a few years down the road?
It’s all painful: the cutting, the raising, the choosing. Nobody likes any of it. But this is an extraordinary situation, requiring our elected adults to send their campaign advisers home and focus on the urgent task of rescuing Nevada. It can be done.
Geoff Schumacher (email@example.com) is publisher of Las Vegas CityLife, owned by the same company as the Review-Journal. His column appears Friday.