Nevada Governor says Budget Shortfall is Nearly $900 Million

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Nevada Gov. Jim Gibbons said Monday the state's budget shortfall could reach $900 million by mid-2009 and he'll work with legislators to find more ways of reducing spending beyond the 4.5 percent cutbacks he ordered in January.

After two closed-door meetings with both Democratic and Republican lawmakers, the GOP governor also told reporters that he hopes to avoid layoffs of state workers. However, there's still a possibility of additional budget cuts of up to 3 percent for some agencies next fiscal year.

Gibbons said he hoped the January cutbacks would resolve the shortfall problems but with a continued slump since then in major tax revenues, "It goes to show you that even the best-laid plans can often go awry."

The projected $900 million shortfall amounts to 13 percent of the nearly $7 billion state budget approved last year for the current two-year budget cycle, which runs through June 2009 - and if the revenue slump continues, the shortfall estimate will grow even larger.

The first-term governor, who ran on a no-new-taxes platform in 2006, repeated his promise to not call a special legislative session to find new revenue sources.

"We are going to live within our means without increasing taxes in the state of Nevada," he said.

Instead, Gibbons said there are various moneysaving options including delays in state building and other one-shot projects, use of reserved and "rainy day" funds and other steps to deal with the looming shortfall.

Gibbons said he'll try to avoid any more cuts in public school, human services and prison or other public safety budgets. All those areas were hit when the earlier cuts were imposed. He also said scheduled pay raises for state workers and teachers won't be canceled.

Assembly Speaker Barbara Buckley, D-Las Vegas, said Gibbons was
cooperative in his closed-door meetings with lawmakers, adding that's different from the earlier cuts he imposed amid complaints that he wasn't consulting with the legislators.

"There were good discussions and we will have follow-up meetings," Buckley said. "Hopefully there will some agreements reached in the next week or so."

Among other lawmakers involved in the meetings were Senate Majority Leader Bill Raggio, R-Reno, Senate Minority Leader Dina Titus, D-Las Vegas, Assembly Minority Leader Heidi Gansert, R-Reno, Assembly Ways and Means Chairman Morse Arberry, D-Las Vegas, and Sen. Randolph Townsend, R-Reno.

"It has been, I think, a wonderful bipartisan coalition of people that have come to see, hear and understand what the state budget is all about," Gibbons said.

The shortfall projections, which have increased more than fourfold since last September, were updated following last week's grim economic news of a continuing slump in sales by Nevada merchants. Also, the state is dealing with higher-than-average unemployment.

The state's cut of sales taxes is now $61 million, or 5.7 percent, below forecasts for the current fiscal year. A recent Gaming Control Board report showed that the state's taxes on casino winnings are $48.2 million, or 8.5 percent, below forecasts for the same period. Taxes on the casinos and on sales are the two largest revenue sources for state government.

Besides gambling and sales taxes, an update at the end of February showed that insurance premium, real estate transfer and business taxes also are down.

While Gibbons said he's try avoid more cuts in K-12 school funding, he didn't mention higher education. Combined cuts in January for K-12 and state university-college systems amounted to nearly $151 million.