Nevada's budget shortfall nearly $3 billion

CARSON CITY " Accounting changes by Nevada lawmakers created a revenue shortfall estimate of $2.2 billion that, while grim, is less than a nearly $3 billion gap to close if government services stay at current levels, the state's budget chief said Monday.

Budget Director Andrew Clinger declined to call the change sneaky. But he said it's clear that what legislators did was to make the projected shortfall for the next two fiscal years look smaller even though new revenue updates have pushed it to the higher amount.

When legislators discussed state budget woes at a news conference on Thursday, they listed revenues "recommended" by Gov. Jim Gibbons at just over $6.1 billion. However, Gibbons' spending plan has a revenue figure of less than $5.7 billion " a difference of more than $400 million.

The Republican governor's plan also lists several tax-related "solutions" the Democrat-controlled Legislature can take to ease the shortfall.

By putting those solutions into the governor's top line of less than $5.7 billion in estimated revenue, the lawmakers' revenue estimate climbs to more than $6.1 billion. That accounting change is the biggest factor in the updated revenue shortfall dropping from Clinger's $2.8 billion to the legislators' $2.2 billion figure.

"The effect of that is to make the amount needed to maintain current services look smaller by already including in the top line new revenue that they have to approve," Clinger said.

It's not just a bunch of meaningless numbers. From a political perspective, using the higher shortfall figure makes it impossible to pass a tax package that's lower than the record $836 million tax increase passed by lawmakers in 2003 and still maintain current services " or even a somewhat reduced service level.

Using the lower shortfall figure, the legislators " including many who want to be re-elected or seek higher office next year " could get below $836 million in new or higher taxes once federal stimulus dollars and other adjustments are included in the final budget mix. They wouldn't face 2010 campaign ads accusing them of backing the biggest tax increase in Nevada history.

To get below $836 million, the legislators wouldn't be able to maintain government services at current levels but could leave intact "essential services" and avoid some of the deep cuts proposed by Gibbons. Those cut include 50 percent reductions in budgets for the two state universities in Reno and Las Vegas.

Democratic and Republican leaders of the Senate and Assembly didn't say on Thursday how much money they need to raise to maintain those essential services, although the Democrats had said in advance of their news conference that some details would be released.

John Ritter, a prominent southern Nevada businessman who has been working with the Legislature and a group of business leaders to find revenue solutions, said at the news conference that he estimates the business community could pay about $1 billion in new taxes.

Asked whether she agreed that the state needs an additional $1 billion, Assembly Speaker Barbara Buckley, D-Las Vegas, seen as a candidate for governor next year, said, "I don't think the B-word is sustainable."

In declining to release their list of spending priorities and "add-backs" into Gibbons' proposed budget, Buckley and other legislative leaders said they would wait until the state Economic Forum releases its final revenue projections on May 1.

A breakdown of the legislative "solutions" that Gibbons listed in his proposed budget include higher hotel-motel room taxes in the Reno and Las Vegas areas that would generate more than $200 million. The levies were endorsed by voters and by lawmakers, but the governor let the tax plan take effect without his signature. That angered both Republican and Democratic lawmakers who said he already included revenue from the plan in his proposed budget.


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