Gibbons Details $517 Million in Budget Cuts

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Faced with a looming revenue shortfall that has ballooned to more than $500 million, Nevada Gov. Jim Gibbons released details Friday on budget cuts affecting all but a few government programs.

The governor, who last fall estimated the shortfall would be less than $200 million in the current two-year budget cycle that ends in mid-2009, said that projection has grown to $517 million as a result of lagging sales tax and other revenue collections.

"Nevada is not unique in its economic status. This is happening nationwide," Gibbons said. "I'm happy we're not California or Florida or Virginia or any of those other states that are seeing larger amounts of economic turbulence."

Gibbons, who ran for governor in 2006 on a no-new-taxes platform, also said he won't call a special legislative session to consider new taxes as a way to deal with the revenue slump. He's also opposed to tapping a "rainy day" fund for fiscal emergencies until late in the budget cycle, rather than now.

The 4.5 percent budget cuts affecting most government programs will hit the state's K-12 schools and its human services programs the hardest. The K-12 system faces cuts of nearly $93 million while the big Department of Health and Human Services is cutting $82 million.

The state's university and college system is in line for cuts of nearly $58 million while the prison system must deal with reductions of nearly $25 million.

Local school board will make final decisions on K-12 cutbacks, but Gibbons listed options such as a hold on plans approved by the 2007 Legislature to expand full-day kindergarten classes and to give local schools more control over their operations through "empowerment" programs.

Educators have argued against inclusion of public schools in the budget cuts, repeatedly citing a new national report giving the state's K-12 education system a D-plus grade.

Other critics include Secretary of State Ross Miller, who said Friday he's going along with the plan even though he considers it "a flawed process from the beginning, veiled in secrecy with arbitrary deadlines and a complete lack of transparency."

State Health and Human Services chief Mike Willden said Gibbons exempted child welfare and juvenile justice programs from the cuts, although enrollment must be capped at 30,000 in the Nevada Check Up
program which provides health care services to children. That means
only about 800 more sign-ups.

While no cuts were necessary in the state's welfare grant program, many new programs authorized by the 2007 Legislature are on hold. Also, the state could lose up to $45 million in federal matching dollars.

Stopgap measures adopted by state university regents to meet Gibbons' moneysaving demands include more fees for students, deferred maintenance, hiring limits, a hold on merit pay and postponed construction projects.

Despite the cuts affecting Nevada's overcrowded prisons, the governor also said that federal standards for inmate health care are being met - although that's being disputed by the American Civil Liberties Union which is threatening a lawsuit.

Gibbons and state Budget Director Andrew Clinger said that even with the 4.5 percent cuts, state government spending will be increasing about 12 percent in the current two-year budget cycle over the previous budget period. They also said that no layoffs or furloughs of state workers will be necessary.

The governor also said he's hopeful that the economy will turn around. Economists say a new boom in Las Vegas megaresort construction could dramatically improve revenues starting in late 2008 or 2009.