Guinn Warns of 2005 Budget Deficits

Governor Kenny Guinn
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Nevada Gov. Kenny Guinn is beginning to warn of another state budget deficit in 2005, but said he would ask the Legislature to cut expenses instead of raising new taxes.

Guinn, who signed a record $836 million tax increase into law in July, said the state stands to lose $187 million in federal revenue over the next two years - including estate taxes earmarked for public schools and the state University and Community College System.

"We need a growth in revenue," the governor told the Las Vegas Review-Journal. "If we end up with a ton of new kids and Medicaid cases, then we could be short."

State Budget Director Perry Comeaux said a healthy economy would provide the 5 percent tax revenue growth the state will need in 2005.

In latest monthly reports, sales taxes grew 10 percent, but casino gambling revenues fell 3 percent.

The state budget director said Nevada's tax revenue must increase more than $300 million every two years just to cover growth in the public school population.

"It is a huge number," he said. "We need a healthy economy."

Guinn said there was no guarantee Nevada would get a grant like a one-time $67 million federal appropriation that was plugged into the $4.9 billion general budget the Legislature passed for 2003-05.

Assembly Minority Leader Lynn Hettrick said there will be less money available in than some lawmakers want when the Legislature next meets in 2005.

"We will have a hole," said Hettrick, R-Gardnerville. "Unless the economy does very well, we will have a problem."

Hettrick blamed Guinn and legislators who backed the record tax increase in July. He and some Assembly Republicans wanted to spend about $300 million less than was eventually approved.

"We aren't going to raise taxes in 2005," Hettrick vowed. "I can't imagine a legislator coming in now who would propose an increase in taxes."

Democratic Assemblywoman Chris Giunchigliani of Las Vegas said new tax increases might be needed in 2005.

During speeches at the end of the recent legislative session, she warned lawmakers about losing federal money at the same time the state is shouldering the cost of federal programs like the schools' No Child Left Behind Act.