CARSON CITY, Nev. (AP) - Lt. Gov. Brian Krolicki outlined a plan Thursday to erase three-quarters of the state's nearly $1 billion revenue shortfall by selling bonds that would be redeemed with payments Nevada now gets from the tobacco industry.

Krolicki estimated the bond sale revenues at "upwards of $775 million," adding that he'd like to see the plan approved by the 2009 Legislature or, better yet, in a special session that could be convened this year.

Krolicki said Nevada's economy will improve but that could take as long as two years. "This gets us to that next positive cycle and that's important" because it could be done without deep budget cuts or higher taxes to avoid such cuts, he said.

"We need to cut expenses, but there's a fine line between being lean and being mean," Krolicki said. Gov. Jim Gibbons already has imposed 4.5 percent budget cuts and is looking at other reductions to deal with the projected shortfall of nearly $1 billion by mid-2009.

As for new taxes, which Gibbons opposes, Krolicki questioned whether that's possible because "the political spread between no
new taxes and taxes is so immense and so fraught with anger and
venom."

With the sale of the bonds, redeemable over 20 years with the tobacco industry payments, "we don't have to raise taxes at all. Let's be prudent stewards of the situation," Krolicki said.

Forty percent of the tobacco payments now are used to help fund Nevada's Millennium Scholarship program providing scholarships to students who go to Nevada colleges and universities. The rest goes
to public health programs and services.

Krolicki said other funding sources for the scholarships and the health services would have to be found, but there's time for that.

He also said that a reduction in state funds for public health programs could cost the state large sums of federal matching dollars, and his plan would keep that from happening.

Krolicki said he's discussed the plan with the governor's office and with some key Republican legislators, but not with the Democratic state treasurer, Kate Marshall, whose office oversees the funds, or with top Democrats in the Legislature.

Gibbons press secretary Ben Kieckhefer says the governor looks forward to working more with Krolicki and getting more details about the idea.

"We're very interested in Lt. Gov. Krolicki's proposal," Kieckhefer said. "If this moves forward, we want to be sure the Millennium Scholarship is protected, which we believe is possible under such a plan."

(Copyright 2008 by The Associated Press. All Rights Reserved.)