CARSON CITY, Nev. (AP) - Nevada Gov. Jim Gibbons on Monday called for education reforms, smaller government and a special Feb. 23 session of the Legislature to deal with an $880 million deficit that he largely blamed on lawmakers disregarding his budget proposals last year.

"The executive budget I prepared in January 2009 scaled back government to weather this crisis," Gibbons said in a special televised "State of the State" address, delivered in a closed
office before a camera. "They made the wrong call."

In a Democratic response, Senate Majority Leader Steven Horsford said while he wouldn't support new taxes in the down economy, Nevada - a state heavily reliant on sales and gambling taxes – must expand its economic base to protect against steep declines in discretionary spending.

"There will be sacrifice and pain," from the immediate cuts ahead, he said.

"And we must learn from the mistakes of the past so that we never return to this period of time where we are forced to choose between meeting our basic obligations and investing in our
future."

Nevada leads the nation in foreclosures and its 13 percent unemployment rate is the second highest in the country. Employers in the state have shed about 120,000 jobs in the last year.

Gibbons, who has suffered low voter approval ratings and is seeking re-election, delivered his speech on the state's problems while facing several of his own, including recently settling a
messy divorce. Last week, he was questioned under oath by the lawyer for a former cocktail waitress who has sued him for allegedly assaulting her outside a Las Vegas bar in 2006 during his last campaign for governor.

Gibbons did not in his speech detail the scope of his proposals, such as cutting state agency budgets roughly 10 percent, a move public school administrators have said could mean thousands of teacher layoffs. Higher education officials worry it could mean closing some colleges and campuses.

Public schools would lose $166 million and higher education $147 million under that scenario.

The governor also has proposed closing the 140-year-old Nevada State Prison in Carson City, a juvenile corrections facility in Las Vegas, and reducing health services to the poor. He also called for laying off 234 state workers and said more across-the-board salary reductions might be necessary as a last resort.

Those proposals were released to lawmakers last week.

Assembly Speaker Barbara Buckley, D-Las Vegas, said Gibbons' speech was a "missed opportunity."

"He had an opportunity to lay out to all Nevadans where we are as a state, and he didn't do it."

Nevada already ranks 49th in the nation in per-pupil spending, she said, and further cuts will put the state further behind.

But Gibbons said his education reform plans that include eliminating class size and full-day kindergarten mandates at some schools would allow school districts and parents more control on
how their dollars are spent.

"Despite 20 years of state imposed student-teacher ratios in first, second and third grade, student achievement in Nevada has not improved," he said.
He also has proposed expanding school vouchers, and on Monday called for the establishment of "Education Gift Certificates," where people could donate money to a teacher, and said he was
donating 6 percent of his salary toward exceptional teachers.

"Society is changing. State government must change with it," he said. "We must focus on the important services which ensure life, health, education and public safety."

Programs that "make some people feel good" but are unaffordable need to be eliminated, he said, adding, "We must cut government spending to ease the burden on our citizens and our
businesses."

Gibbons ordered two commissions to deliver reports in 30 days on how to increase tourism and encourage businesses to relocate to Nevada or expand current operations.

Horsford, D-North Las Vegas, said the governor's proposals to date would only close about half the deficit and "roll back decades of progress: in mental health services, public schools and
higher education.

To fill the void, Democrats are proposing shifting school construction funds to meet immediate operational needs, reducing the school year and reopening current teacher and administration
contracts to implement salary reductions.

Horsford said other options could include closing some buildings and departments, reducing operating hours, and "sweeping" general fund subsidies received by some state agencies that are otherwise mostly funded by fees.

Unless Nevada's tax base is expanded, Horsford said the state will face a $3 billion shortfall when the next biennium begins July 1, 2011. The Legislature's Interim Finance Committee begins
hearings on the budget Tuesday.