Leaders seek common ground on budget crisis

Legislative leadership today are to begin building a mutually agreeable plan to fix Nevada's budget crisis.

But with the governor still maintaining he will veto any attempt to increase taxes or fees and Assembly members arguing the depth of cuts needed without more revenue will devastate governmental services, the options are limited.

And the exchanges between Assembly Democrats and the governor have been less than polite this past week. Speaker Barbara Buckley, D-Las Vegas, said the governor's special session was just an attempt to divert attention from his turbulent personal life including his impending divorce.

"You would have to be a moron to suggest that," Gibbons fired back.

Gibbons plans to issue what spokesman Josh Hicks said is, hopefully, a consensus plan Thursday and open the session on Friday.

Buckley said Sunday she and Senate Majority Leader Bill Raggio, R-Reno, will begin trying to find that consensus today.

The governor originally wanted the special session to start today. The delay was ordered after the picture got even darker Friday. First, state officials announced a half percent increase in Nevada's unemployment rate from April to May. The 6.2 percent rate is the highest since May 1994 and nearly a percent above the national rate.

Second, the Economic Forum cut back its projections for state revenue this coming fiscal year by another $250 million plus, raising the total shortfall this budget cycle to $1.2 billion.

Lawmakers and the governor have already agreed on how to cut $913.7 million of that total, but only a small part of that came out of operating budgets. The vast majority came by eliminating or delaying capital construction and maintenance projects and by draining the state's $267 million Rainy Day Fund.

The additional $250 million - possibly more - will have to come out of agency operating budgets for the fiscal year that begins July 1.

Among the suggestions raised so far is taking away the 4 percent raises state workers and teachers will receive beginning July 1. The special session was called on short notice because, once granted, those raises can't be taken back. Doing so would save about $134 million next year and the move was proposed by Senate Majority Leader Bill Raggio, R-Reno.

However, very few Assembly Democrats support that move. And Sen. Bob Beers, R-Las Vegas, said last week there aren't enough votes in the Senate to take back the raises either.

Director of Corrections Howard Skolnik has suggested his plan might be to close down the Nevada State Prison on Fifth Street. One of the oldest continually operated prisons in the U.S., wardens and directors have complained for years NSP is grossly inefficient compared to Nevada's newer prisons in many ways, including heating and cooling costs and the number of correctional officers required to staff it.

Closing it, he said, could save $19 million a year. While most staff would transfer to other institutions, it would jeopardize jobs of some of the 200 officers assigned there.

Treasurer Kate Marshall has suggested cutting off all overtime for state workers, which she said would save up to $18 million, and eliminating out of state travel until July 1, 2009.

Lt. Gov. Brian Krolicki recommended converting the state's annual tobacco settlement money into a one-time bond he says could be worth as much as $775 million. But that is much less than the projected $1.2 billion in tobacco payments to Nevada over the next 17 years. And the plan would eliminate programs including Senior Rx and the Millennium Scholarship now funded by those annual payments. Marshall said another downside is that plan could endanger the state's overall bond rating, potentially costing millions in higher interest payments into the future.

Several legislators including Senate Minority Leader Steve Horsford, D-Las Vegas, are asking how much converting state government to a four-day, 10-hour work week would save. Both legislative and administration experts say probably not very much unless employee hours were also reduced.

A revenue raising suggestion was made by the Terry Lanni, CEO of Nevada's largest employer MGM-Mirage. He said lawmakers should consider doubling the Modified Business Tax to 1.23 percent, which could generate an estimated $250 million a year.

One reason some casino officials might support that is that all businesses pay the MBT where the gaming percentage fee is paid only by casinos and an increase in the room tax is largely paid by casinos. Gaming has long argued other businesses in Nevada are basically being subsidized by them.

Other casino officials, however, are backing a 3 percent increase in the room tax to improve educational funding.

And Taxation officials say there is well over $100 million owed to the state by businesses that could be collected if the state could track them down. The question is how to do it.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.