Nevada governor revamps budget cut plan

CARSON CITY, Nev. (AP) — With a worst-case revenue shortfall estimate growing to $440 million, Nevada Gov. Jim Gibbons on Friday said he’s expanding the number of agencies and programs facing budget cuts — but by spreading the load overall cutbacks will be less than 5 percent.

The change helps the state’s human services programs and its university and college system, which were hard hit by tentative plans for cuts of up to 8 percent. But the new 4.5 percent reduction plan now includes prisons and K-12 public schools, which had been exempt.

“This is a much more favorable approach to reduce the state budget by an overall 4.5 percent rather than individual agencies picking winners and losers, giving the losers a bigger 8 percent reduction,” Gibbons said in outlining the latest plan.

“Taking 4 1/2 pennies out of every dollar that we are providing is not a draconian measure. It’s much more doable,” Gibbons said.

For the state’s Health and Human Services Department, which had faced cuts totaling $140 million, the new figure is about $78 million. For the university-college system, the reduction drops from nearly $103 million to just under $58 million.

But the K-12 public schools now must deal with about $95 million in reduced state funding during the current two-year budget cycle, which ends in mid-2009; and the state’s crowded prisons have to cut spending by about $24 million.

While the Republican governor said he outlined the plans to various agency administrators and key legislators in advance of his Friday announcement, Democratic Assembly Speaker Barbara Buckley said she was caught off guard by the K-12 funding cuts.

“I’m shocked that the governor would cut education funding when we have serious deficiencies in education funding in our state,” Buckley said. “I think it’s the wrong move. It will take us backward. The K-12 budget should have been exempt.”

But Gibbons said that spreading the impact to more agencies was essential to avoid layoffs of employees, potential court battles raising fairness issues, and a big loss of federal matching funds — especially in human services programs. Also scheduled pay raises for state workers and teachers remain in place.

Gibbons also said agencies can meet part of their 4.5 percent reduction mandates by not moving ahead with approved construction projects. That could add up to $30 million or more of the total.

The governor also said a major factor in keeping the cuts below 5 percent was a decision to draw between $100 million and $200 million from the state’s rainy-day fund for fiscal emergencies. That fund would be tapped late in the budget cycle, when the 2009 Legislature is in session. Under the latest plan, there would be no need for a special legislative session in advance of the regular session.

Gibbons and Budget Director Andrew Clinger said the updated estimate on the state’s revenue shortfall, from $286 million to $440 million during the budget cycle, assumes a continuation of the current slump in key revenue sources, particularly sales taxes.

However, there already are signs of improvement, notably in casino taxes which, along with sales taxes, are state budget mainstays. And a new boom in Las Vegas megaresort construction could dramatically improve revenues starting in late 2008 or 2009, economists have said.

Gibbons plans to meet with Nevada school superintendents next week to discuss the latest plan. He also asked the state’s elected constitutional officers to join in the effort. The biggest impact for those officials would be a cut of $1.4 million for Attorney General Catherine Cortez Masto.

A few exemptions from any cuts remain in place. They include child welfare and juvenile justice programs and some court system budgets.