No easy solutions to budget crisis

Now is the time to work toward solutions to the impending state budget crisis. Gone are the days when we could lament the desultory impact of more revenue reductions on the economy. Gone also is the time when we could just complain about the perceived unfairness and deficiencies of the state's "outmoded" tax structure.

The governor and the Legislature have heard the pained voices on how further budget cuts will devastate an agency or sector. We know that. And, while some of us feel that reforms of key sectors need to be made, those changes are longer term and will not resolve the immediate crisis. While others may argue that their particular system or agency cannot possibly absorb any further cuts without destroying that sector, the reductions will come " and in the next five months.

There has been a running debate regarding the fairness of Nevada's tax structure. A great topic for debate, but any study on our current tax system will take considerable time. Put that idea on the shelf.

The state is facing a deficit in the next biennium (two-year) spending plan that may run as high as $2.3 billion below the $8.1 billion needed to run the state. In the 2009 session, the Legislature, responding to the governor's draft spending plan, will have to either implement draconian reductions " or devise ways to increase revenue quickly and by significant amounts.

The important discussion that needs to take place from this point forward addresses two points: (1) How deep should the reductions be; and (2) If new revenue sources are deemed necessary, what specific tax should be implemented and what impact " positive and negative " would that new tax have?

With respect to reductions, what precise cuts should be made to which sectors, or should an across-the-board slash be imposed? While the latter is not a sharp solution, it does apply the reductions equally. If variable cuts are advised, then which areas should be reduced beyond the 34 percent average, and which agencies should be spared such deep reductions (and how much)?

We also need to understand how to deal with the impact of the cuts. For example, fully 28 percent of the state's budget derives from grants, primarily from the federal government matching state expenditures. If those state commitments dry up, so will the grants from Washington. Another concern "what happens if federal lawsuits mandate particular spending levels, say for prisons, as occurred in California?

For those who advocate new revenue sources, three questions must be addressed: (1) Define precisely the new tax or source; (2) Explain how long it would take before any revenue is received (e.g., a state income tax would require a change to the Constitution and not be felt for several years), and how much revenue would be generated over what period of time; (3) Explain the negative impact such a tax would have (e.g., if the 44 percent hike in taxes on gross gaming revenues is passed, as advocated earlier by the teachers' union, how many casinos would likely go under?).

I'm tempted to add a fourth " how would this new tax impact you (since most proposals are for taxing "someone else" " mining, gaming, room tax, "broad-based" business taxes, etc.).

During the 2008 campaign, hand-wringing was constant, as were strong commitments not to raise taxes. Republicans ran on a platform of "no new taxes," echoing the governor, but Democrats also shied away from advocating new revenue sources. Suggestions of new revenue enhancements may prompt cynicism on the part of the electorate toward our elected officials.

In sum, the time for hand-wringing and lamentations has passed. There are no easy solutions. What the governor and the Legislature need are clear recommendations on the tough choices relating to spending reductions or tax increases. Be part of the solution, not the problem, when you weigh in.

- Tyrus W. Cobb is a former special assistant to President Ronald Reagan.