Gov. Kenny Guinn is telling state agencies to brace for possible budget cuts, besides the hiring freeze and non-funding of some new programs he ordered earlier as Nevada's economy slumped.
State Budget Director Perry Comeaux confirmed Tuesday that agency directors are getting letters this week thanking them for their budget-trimming efforts so far -- and "telling them that our financial situation has not improved."
Guinn's letter says he's reviewing a list of possible budgeted expenses that could be cut, and will soon decide "what cuts can be made without sacrificing critical state programs."
"We will try to surgically remove from the budget the amount that has to be removed, and take it from places where it will do the least damage," Comeaux said.
Comeaux added the Republican governor doesn't plan a meat-ax approach and especially wants to protect education, state employees and health programs. Asked about possible employee layoffs, he added, "That has not come up and I don't expect it to."
Guinn is continuing the hiring freeze that has left more than 1,400 approved employee positions vacant. That is expected to make it tougher for agencies to obtain exemptions from the freeze.
The governor also called for limited overtime, saying it should be authorized only "when necessary and justified."
The earlier decisions to not fund certain programs or make purchases that had been approved by the 2001 Legislature also remain in place.
Comeaux said the state Economic Forum had projected total state revenues of $1.8 billion this fiscal year -- and with the year more than half over "we've got a $60 to $61 million problem."
The budget chief said that includes a shortage of about $40 million in the main budget revenues, plus an additional $20 million shortage in local school support taxes that the state might have to make up from its general fund.
If the current revenue trend continues, Comeaux said the shortage would be in the $100 million range by the close of the fiscal year June 30.
Besides the budget-cutting steps Guinn is taking for the current two-year spending cycle, he also has told state agencies to produce no-growth budgets for the 2003-2005 budget cycle.
Citing the economic downturn since Sept. 11, Guinn in late February ordered all agencies to submit budgets for fiscal 2003-05 that mirror funding levels in the budget for the fiscal year starting in July.
That prompted Assembly Speaker Richard Perkins, D-Henderson, and Senate Minority Leader Dina Titus, D-Las Vegas, to complain it's too early to talk about flat budgets. They said the economy can turn around by the time lawmakers convene their 2003 session.
Titus and Perkins also noted that with a lack of new programs, Nevada will continue to fall behind in national rankings on social services. The state ranks 44th in the nation in per-student spending on public schools and has consistently done poorly in the annual Kids Count study that grades the health and welfare of children.
Guinn has said one reason he ordered flat budgets was to have enough for a key priority: a pay raise for the teachers. He added that the no-growth formula "is a better way to plan for the unknown."
The governor also said he must present a balanced budget to the 2003 Legislature, and doesn't want to bet on lawmakers passing some type of a tax increase package. Recommendations on possible new taxes will come from a Guinn-appointed panel that's now reviewing potential revenue sources, but won't make suggestions until after the November elections.