Governor's office asks for impact of additional cuts

Gov. Jim Gibbons has asked his agencies to spell out what they would do to cut another 1.4 or 3 percent from their budgets.

But Deputy Chief of Staff Lynn Hettrick said that doesn't mean the governor plans to make those cuts to cover the growing revenue shortfall.

The Department of Taxation earlier this week released first-quarter collections, which fell $56.6 million short of projections used to build the state budget.

This is all preliminary," he said. "We truly have no plan. We're just doing our homework.

Hettrick said those agency reports are due on his desk by mid-December. He emphasized that the press conference Gibbons has called for next Tuesday will not announce a special legislative session.

He said the governor can't wait on planning for potential cuts until June when there will be just one year left in the budget cycle to balance the budget.

"If we do that, we're going to have a $130 million hole to fill in the back year," he said, adding the only option at that point would be to cut jobs.

"The last thing we want to do is cut jobs," Hettrick said. "That just puts more people on unemployment and other state programs."

He and Stacy Woodbury, the governor's other deputy chief of staff, said every agency including higher education and K-12 public schools was asked to provide plans for both the 1.4 and 3 percent reductions. Hettrick said 1.4 was chosen because that is the difference between the 6 percent pay reductions originally requested by the governor and the 4.6 percent approved by the Legislature. The 3 percent, he said, was designed to give an idea how much more dramatic the impact would be if 1.4 percent had to be sharply increased.

Woodbury said for salaries alone, each percent amounts to about $35 million if K-12 is included and that salaries make up about 75 percent of General Fund spending. Hettrick said that a significant amount of what's left is in programs such as Medicaid which the state, by federal law, can't cut.

Hettrick also said people should stop pointing to the $160 million loan from the Local Government Investment Pool as an option to cover any shortfall.

"It's already in the budget," he said. "It's $30 million the first year and $130 million the second. If we pull the $130 million forward, guess what: You leave a $130 million gap in the second year."

Taxation department figures for General Fund revenues released earlier this week show that for the first quarter - July, August and September - collections were $56.6 million less than the projections used to build the state budget. The three largest revenue generators - sales tax, gaming tax and the Modified Business Tax - accounted for $41.5 million of that total.

Director of Administration Andrew Clinger said, however, analysts expected the first quarter of the fiscal year would be the worst.

"I anticipate it's going to start getting better," he said.

Spokesman Dan Burns said Gibbons has advised senior staff he will wait until he has a better handle on what agencies have spent before deciding if and when to call a special legislative session. Hettrick said that will also give time to look at the impact of further cuts.

"There are going to be some things we just can't cut," he said.

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