Lawmakers grill Gibbons' staff on budget

Skeptical legislative leaders aimed tough questions at the Gibbons administration Thursday, making it clear they don't like numerous elements in his proposed budget.

Gibbons and agency heads had to make cuts and find added revenues to cover what would have been a $2.3 billion shortfall. The final budget consists of $6.2 billion in General Fund money and a total of $17.3 billion when all revenues are added in.

Senate Majority Leader Steven Horsford, D-Las Vegas, started the challenges saying he doesn't believe the plan to increase room taxes 3 percent in Washoe and Clark counties will generate anywhere near the $292 million projection in the budget.

He said the room tax revenues would basically be coming from hotels on the Strip since other areas, including Washoe County, are already near or at the 13 percent room tax cap. Because of that and the state of the economy, he said, he thinks the estimated revenue needs to be greatly reduced.

"That projection could be off by $150 million or more," he said.

Sen. Bob Coffin, D-Las Vegas, objected to the governor's plan to take 4 cents of the $3.64 maximum property tax rate from Washoe and Clark.

"Why are we taking it from the counties?" Coffin asked Director of Administration Andrew Clinger.

"We felt there was room in Clark and Washoe for them to make reductions in their budgets," said Clinger.

Coffin said it would be more honest for the state to increase the maximum property tax rate instead of taking money from the counties and cities.

Clinger said the governor didn't want to do that because it would be a tax increase.

"By not being open and honest on this, which is raising the state ad valorem tax, you are saying to counties you raise your taxes to make up for what we are taking," he said.

Several lawmakers questioned the legality of demanding that school districts cut teacher salaries 6 percent, saying some counties may have collectively bargained contracts that would prohibit cutting salaries.

Chief of Staff Josh Hicks said that across the country, negotiations are being held between governments and unions, reopening contract negotiations because of the fiscal emergency.

"If the money's not there, we would hope the unions would be willing to look at those," he said.

"Some districts have multi-year contracts and this seems like a legal nightmare," said Assemblywoman Debbie Smith, D-Sparks.

But in response to repeated questions by Speaker Barbara Buckley, D-Las Vegas, Clinger and Hicks admitted none of the school districts or local governments had been contacted about the proposed cuts to their budgets.

Senate Minority Leader Bill Raggio, R-Reno, questioned the 35.9 percent general fund cut to university system funding.

"What analysis was done to determine the system could operate effectively with that reduction?" he asked.

He questioned whether the university system could survive that reduction.

Clinger said the decision was made because, "the feeling was that compared to other components of the budget like K-12, higher education has other options to look at, other outside revenues."

"It's hard to know how to respond to this plan," said Buckley. "If we want to have a dialog about changing the way we fund higher education, we could do that. But you can't raise tuition 250 percent in a year."

Assemblywoman Sheila Leslie, D-Reno, questioned the wisdom of cutting the Agency for Nuclear Projects from seven to two staff members just as the Department of Energy files to license Yucca Mountain as a nuclear waste dump.

"We're almost on the verge of winning," she said. "This is not the time to be slashing the nuclear waste litigation fund."

Buckley also questioned the decision to eliminate the Governor's Office of Consumer Health Assistance, which helps consumers with health insurance and access problems. She pointed out it was her idea to create the office because there is no other agency dedicated to helping consumers with those issues.

"They have saved consumers in Nevada millions of dollars," she said.

Assemblywoman Kathy McClain, D-Las Vegas, said the office has saved consumers "tons of money and tons of heartache."

Horsford asked for more information on the plan to shut down Nevada State Prison, saying, "I'd like to understand why we are building a new prison when we're proposing to close one and lease another."

That refers to closing NSP and plans to lease the Jean prison for the next four years to federal immigration officials then convert it to a women's prison.

Assemblyman Tom Grady, R-Yerington, said he understands there have been substantial and expensive upgrades to NSP in the past few years.

There were also questions about the plan to consolidate the Mortgage Lending and Financial Institutions divisions given the major problems in the housing markets, about converting the Insurance Division to a fee-supported agency, saving more than $7 million in General Fund and the proposed elimination of the Consumer Affairs Division.

While members agreed many of that division's cases should be handled by other divisions such as Real Estate or the Contractor's Board, Buckley said some of the consumer complaints are not handled anywhere else.

Horsford said during the lunch break that his big concern is many of the governor's proposals "are based on information we don't have readily available." He said lawmakers need the rationale for how these decisions were made in building the budget.

The hearings continue today through Wednesday.

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

Legislative money committees will spend today examining the impact of budget cuts on the programs that help Nevada's neediest, most fragile citizens.

The Welfare Division, Mental Health and Disabled Services, the Division of Child and Family Services, Aging and Veterans Services will all present overviews of their proposed 2009-2011 budgets.

The biggest issue in Health and Human Services centers on those budgets built around the assumption that the federal government will approve a temporary increase of 8 percent in the percentage of federal matching funds to the state, generating a total of $108 million for a number of different programs. The bulk of that money goes to Medicaid but also impacts Child and Family Services and Nevada Checkup.

Director of Administration Andrew Clinger said the current version of the House legislation is actually much more generous than that so he is confident at least an 8 percent temporary hike in the matching rate will be approved.

The proposed budget saves $1.5 million by capping enrollment in Nevada Checkup at 25,000. The program already has more than 24,000 members, which means most new applications for children of families who can't afford health care would have to be put on a waiting list.

Some of the cuts in HHS include elimination of state funding for the 211 telephone help system and taking the Indigent Supplemental Account, which provides hospitals payments for treating indigents who suffer major accidents. The money will be used, instead, in the Medicaid budget to get a $28 million increase in federal matching money, in effect doubling the indigent fund money.

The plan cuts rates paid for personal care attendants by $3 an hour to $15.52.

Eight of the state's 11 remaining rural health clinics would be closed under the plan and 126 positions eliminated in the Southern Nevada Mental Health budget.

It will cost nearly $600,000 to take over the Medicaid Management Information System and an estimated $84 million to cover caseload growth in Medicaid.

Hospital inpatient rates are being reduced 5 percent on top of the 5 percent cut hospitals suffered this year. Concerns have already been raised that the additional cut might force two or three small hospitals to close.

The plan makes Elko School District take over operation of the high school at the Nevada Youth Training Center, the state's juvenile prison, saving $666,000 over the biennium. The Summit View juvenile correctional center in southern Nevada will be reduced from 96 beds to 48 beds " a $16 million savings " and Caliente Youth Center will close one housing unit.

Those are just a few of the proposed changes to the Health and Human Services Department budget which will be outlined for lawmakers in today's hearing.

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