Emergency Budget Meeting Held

By: Brendan Riley AP
By: Brendan Riley AP

CARSON CITY, Nev. (AP) - Nevada Gov. Jim Gibbons, other state officials and key lawmakers said Thursday they'd work together to
deal with a budget shortfall now certain to top $1 billion by mid-2009 - but clashed on strategies for finding more revenue.

"We are in some dire circumstances," Gibbons said after the closed-door, hour-long meeting, adding, "Everything is going to be on the table, everything from a special session to ideas on how to resolve these budget revenue shortfalls."

After Senate Majority Leader Bill Raggio, R-Reno, questioned the need for such a session, in advance of the regular 2009 session which starts in February, Gibbons repeated that the idea is under consideration and he'll make a decision on that "in the next several days."

Only the governor can call a special session, although lawmakers usually endorse the idea in advance.

"I don't think that's going to be necessary," Raggio said, adding that the lawmakers' Interim Finance Committee, which handles various matters between regular sessions, could sign off on some budget changes.

As for the state of the economy, Raggio said, "I don't know whether I term it dire, but these are certainly tough times."

Assembly Speaker Barbara Buckley, D-Las Vegas, who participated
by phone in the meeting, said she was puzzled because the governor
didn't talk about specifics that would be considered at a special session. Instead, Buckley said, "he left many of the legislators wondering exactly what he was proposing."

Lt. Gov. Brian Krolicki also participated by phone, pushing his
"securitization" plan that could raise about $600 million to reduce the shortfall through a one-time bond sale. The bonds would be paid off over 23 years with about $1.25 billion in tobacco company payments.

However, Gibbons said the plan "could be very costly to the state of Nevada." He added it might help with the $1 billion shortfall in the current two-year budget, but the state faces a similar shortfall in the coming two-year cycle which will open in July 2009.

Senate Minority Leader Steven Horsford, D-North Las Vegas, told reporters that during the private meeting questions about the bond sale plan were raised by both Attorney General Catherine Cortez Masto and state Treasurer Kate Marshall.

Horsford also said he hoped that moneysaving moves wouldn't include across-the-board cuts affecting all state agencies, especially those that get large sums of federal matching funds.

The governor and lawmakers already have approved 4.5 percent budget cuts for state agencies, along with delays in one-shot appropriations and construction projects and tapping the state's "rainy day" fund for fiscal emergencies.

Assemblywoman Sheila Leslie, D-Reno, said one possibility that could save more than $30 million in the coming fiscal year would be to get the federal government to hold off on new Medicaid rules that will cost all states more money.

"If we all put a full-court press on, maybe we could get them to delay that," Leslie said.

There appeared to be little support for cutting out pay raises for state workers and educators scheduled to take effect in July. Raggio said that would require a special legislative session, and there's very little time between now and July 1 to conduct one.

Also, Raggio said that blocking the scheduled increases during tough economic times would be "putting salt in the wounds" for those who wouldn't get the raises.

Thursday's meeting followed a report Wednesday on gambling tax collections that showed a decline of 3.5 percent in May compared with the same month last year. That led to a recalculation of a shortfall in all revenues through mid-2009, raising the figure to just over $980 million.

State Budget Director Andrew Clinger said another recalculation is in the works, and that will push the anticipated shortfall to $1 billion or more by mid-2009. He said the shortfall will be at least $1 billion more in the next budget cycle that runs through mid-2011.

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


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