Bad News for State Budget

CARSON CITY, Nev. (AP) - Nevada lawmakers trying to produce a
balanced budget for the next two fiscal years were told Friday the
existing tax structure will net them only $5.5 billion - well under
the $6 billion-plus spending plan that Gov. Jim Gibbons proposed in
January.

The state Economic Forum's revenue estimate, accounting for all
taxes, fees, fines and interest income that should flow into state
coffers over the two years, assumes that Nevada's tourism-dependent
economy won't start to improve until mid-2010.

State Budget Director Andrew Clinger said the revenue shortfall
approaches $900 million because the state must help local school
districts hit with slumping sales and property tax collections by
giving them about $380 million or more.

Clinger added that Gibbons, an anti-tax Republican, will produce
budget amendments - in the form of more cuts - next week to cope
with the shortfall. Those amendments could, among other things,
nearly double 6 percent pay cuts for state employees already
proposed by the governor. But he's still trying to avoid layoffs.

"The $900 million that we're talking about today, that's the
number that we've been talking about for the last couple of
weeks," Clinger said, adding, "As far as the level of difficulty
to balance the budget, it certainly doesn't make it any easier."

"You can't take $900 million out and not see reductions in
services," Clinger said. "The trick is trying to pick the
services that are going to have the least negative impact on the
citizens of the state. That's the hard part."

Gibbons, who can fill part of the budget hole with about $350
million in federal stimulus funds, on Thursday renewed his threat
to veto any tax increases that the Democrat-controlled Legislature
approves to avoid some of the deep cuts he already has proposed in
education, human services and other areas.

If Gibbons does veto the legislators' budget plan, they're
likely to attempt a veto override just before the scheduled June 1
end of the 2009 session.

A breakdown of the Economic Forum projections shows that forum
members expect sales taxes to decrease 6.7 percent next fiscal year
and increase 2.2 percent in the following year for a total of about
$1.6 billion. Gambling taxes should increase 3.7 percent in the
first year and 2.1 percent in the second, generating a total of
nearly $1.5 billion.

The two revenue sources account for nearly two-thirds of all
state revenues.


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