With another month of weak sales tax receipts driving the budget shortfall even higher and job growth stagnant for the past year, Gov. Jim Gibbons is expected to announce a second round of budget cuts Monday.
January's taxable sales were down 4.9 percent compared to January 2007 putting collections a total of $61 million behind projections used to build the budget. That is significantly worse than the $40.5 million deficit as of Dec. 31.
In addition, the Department of Employment Training and Rehabilitation reports Nevada has only added 1,300 jobs in the past year - a growth rate of one-tenth of a percent.
Neither legislative analysts nor the budget director Andrew Clinger would reveal their latest projections. But if other revenue sources follow the sales tax as they have for the past nine months, that would push the total shortfall this biennium well past the $800 million mark.
If that's true, Gibbons - who has already ordered some $560 million in cuts - will have to cut about $250 million more.
The governor plans to announce the new numbers Monday along with what he intends to ask in new spending reductions.
Unlike the first round of cuts, a flat 4.5 percent reduction in general fund spending for all state agencies, the university system and public schools, the second round is expected to target specific projects and accounts.
While Clinger wouldn't give any details about the governor's plan, he did say every effort is being made to avoid layoffs.
But if specific cuts don't cover the total reduction, agencies may be asked to further reduce ongoing expenditures.
There are several large pots of money in the state budget the governor is eyeing to cover the majority of the cuts.
The biggest is the Capital Improvement Projects budget containing just over $190 million in general fund money. Some of those projects could be reduced in size or delayed to reduce the shortfall. One example might be the Agriculture Department's new $29 million building. Since just $6 million of that is general fund, the project may simply be reduced in size.
Any delays or reductions in projects, however, will draw strong opposition from the university system, which is second only to the Department of Corrections in total Capital Improvement dollars.
The prison system projects are more difficult to cut because the current institutions are already overcrowded, but there are a couple of conservation camp projects that may be targeted for delay since changes in good-time credit statutes are enabling the state to release many nonviolent offenders. Those are the same inmates who are eligible for the minimum custody camp beds.
But state officials are also reportedly considering the possibility of bonding for some of those projects in order to free up the cash.
Public Works Manager Gus Nuñez refused comment on the governor's plans Friday.
The second biggest pot of money found in reviewing the budget is the $154 million in general fund cash appropriated to the Nevada Department of Transportation, primarily to jump start construction along I-15 in Las Vegas. NDOT officials say that money has already been committed in a design build contract so while they expect the administration to take some of it, they can't take anywhere close to all of it.
The excess reserves in the Public Employee Benefits Program are also a potential target. That reserve contained more than $44 million in excess funds at the start of the fiscal year.
That total includes federal, highway fund and fee money as well as general fund. But up to a quarter of that amount may still be available to help balance the budget. None of the PEBP executive staff was available to verify that information.
Then there are two separate pots of money in the appropriations act totaling more than $70 million. First is the $35 million Gibbons left in the Rainy Day Fund during the first round of cuts. The money was left as an emergency account in case of a bad fire season or other unanticipated major expense. To use that money on the shortfall, however, would require the full Legislature to act. It could be counted on the books as a budget cut but not actually taken until the 2009 Legislature convenes.
The other is a $36 million appropriation to cover potential litigation costs from the different legal battles the state is involved in.
The estimated $40 million Treasurer Kate Marshall swept from excess money in bond accounts will all go toward the shortfall.
Then there are a number of smaller appropriations throughout the budget ranging from the $5 million set aside for stream habitat restoration to $1 million for local government alternative homeless programs.
Those programs, however, have strong constituencies who could make taking the money politically unacceptable.
Also unlikely to be eliminated is the $3.6 million to upgrade the Unified Tax System, which experts say will actually generate revenue for the state and the funding to buy high-band radios for Emergency Medical Services vehicles.
One appropriation already eliminated is the roughly $3 million in the Legislative Counsel Bureau budget to plan a new legislative staff office building. Director Lorne Malkiewich said that money is "gone" and the project will just have to wait for better economic times.
To meet the shortfall as projected two months ago, Gibbons ordered across the board 4.5 percent general fund reductions. That included $57 million from the university system and $92.7 million from public schools as well as $81 million from Health and Human Services. Those amounts made up the lion's share of the $263.8 million in cuts to ongoing programs and $50 million in reductions to one-shot and capital improvement projects.
The rest of the governor's original reductions were to be covered by taking all but $35 million of the state's $267 million Rainy Day Fund.
Any new reductions he calls for Monday will be on top of those amounts.
• Contact reporter Geoff Dornan at email@example.com or 687-8750.