CARSON CITY, Nev. (AP) - Gov. Jim Gibbons agrees caution is needed in considering a plan to reduce the state's growing revenue shortfall by selling bonds that would be redeemed with payments the state now gets from the tobacco industry, a spokesman said Thursday.
Press secretary Ben Kieckhefer said Gibbons met with Attorney General Catherine Cortez Masto who described complex legal issues
involved in the bond sale plan advanced by Lt. Gov. Brian Krolicki. Krolicki participated by phone.
"Caution is warranted. There are many complex issues, and it's the opinion of all three that all legal ramifications must be considered," Kieckhefer added.
Krolicki outlined the "securitization" proposal last month. He has estimated that bond sale revenues could amount to $600 million
or more, and that would put a big dent in a revenue shortfall estimated to be nearly $1 billion a year from now.
Gibbons is considering various options to cope with the revenue crisis, including Krolicki's proposal that would revise the use of the tobacco payments made under terms of a master settlement agreement, or MSA, between states and the tobacco industry.
In a letter to Gibbons in advance of Thursday's meeting, Masto said her office has the job of enforcing provisions of that agreement.
Nevada is involved in litigation against several tobacco companies, Masto said, adding that "at stake is Nevada's future entitlement to tens of millions of dollars in annual MSA settlement payments."
Krolicki said 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. He said Nevada's economy will improve but that could take as long as two years, and his plan would help to avoid deep budget cuts or higher taxes.
Gibbons already has imposed 4.5 percent budget cuts and is looking at other reductions to deal with the projected shortfall.
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.
(Copyright 2008 by The Associated Press. All Rights Reserved.)