Former governors recall their handling of budget cuts
November 7, 2007
This is far from the first time a Nevada governor has had to make budget cuts to cover a revenue shortfall.
It happened to Gov. Bob List and his successor Richard Bryan in 1982-83, to Gov. Bob Miller in 1991 and Gov. Kenny Guinn in 1999-2002 – pretty consistently every 10 years.
Using that bit of history as a pattern, the state should have had another four or five years before the next crisis. But the collapse of the housing market over the past year speeded things up a bit.
A review of those prior budget crises shows that the 5 percent Gov. Jim Gibbons has asked agencies to prepare for is far from the deepest cut. Except for schools, Medicaid and prisons, Miller’s 1992 cuts averaged more than 11 percent. His 1993 cuts exceeded 15 percent and between the two years, 683 positions were eliminated.
While he gave the schools a break, asking only 5 percent back from their budgets, they too participated in the pain.
“Everybody except former President Bush seemed to realize we were in a recession,” said Miller on Tuesday. “It was a great time to invest probably in Rolaids and Tums because I was consuming them by the truckload.”
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Miller, a Democrat, said one tough issue was his decision to delay state worker raises to help cut spending.
“I had a disagreement with Bob Gagnier of the State of Nevada Employees Association. I thought it advisable to delay the 5 percent salary increase rather than have to fire people and he preferred we fire people and took us to court.”
But the strongest protests came from his cuts to the mental health budgets. Miller received hate mail and found replicas of coffins on the mansion’s front lawn.
“I understand the needs for people in those areas are dramatic but they were just not willing to accept there was a need to cut at all,” he said.
A decade earlier, the cuts List made probably cost him his re-election bid.
With unemployment more than 10 percent, he ordered agencies to prepare for 10 percent cuts in April 1982. He froze hiring and had to order layoffs as well.
“It was tough,” he said, recalling the situation. “We actually had to downsize the state work force and we took cuts pretty much across the board. I don’t recall that there were any flat out exemptions.”
List, a Republican, said he believes Gibbons was right to start the process early.
“It takes a long time to sort this out and I don’t understand the criticism of the governor for doing this.”
Bryan, a Democrat, said the pain didn’t stop when he took office after List in 1983.
“We were really concerned that first month I was in office whether the cash flow would be sufficient to pay state payroll,” he said.
Bryan said he and budget director Bill Bible found a couple of clever ways to fix the situation.
“One of first measures we presented to the Legislature was to change the collection cycle for gaming revenue from quarterly to monthly.”
He said lawmakers quickly passed that measure, providing immediate cash flow to the treasury.
“And we deferred a scheduled pay increase as I recall. We were scrambling.”
In addition, Bryan ordered a recall of the $20 million the state had loaned to the Public Employee Retirement System in 1979 along with $7 million transferred from general fund to the highway fund in 1981.
Guinn said he started making cuts even before he took office in 1999.
“In November I started working with Perry (Comeaux, the budget director) and we made a lot of changes to get us down.”
“We had a rule and it was a tough rule,” he said. Agencies were ordered to build their budgets with no increases. Any increase had to be justified separately.
Guinn had to keep cutting but found a couple of pots of cash to reduce the size of the reductions.
In the 2001-02 budget cycle, he made up nearly $100 million of the shortfall from the Intergovernmental Transfer Account, a holding account for Medicaid funding which had accumulated a surplus over a number of years.
“It was just sitting there so we took that to offset a lot of our costs.”
He ordered agencies to cut 3 percent in August 2002 as the state’s revenue collections continued to lag and he finished that budget cycle by taking $135 million out of the Rainy Day Fund.
Guinn said for the 2003-04 budget cycle, the state was looking at a $700 million shortfall and there was no choice but to increase revenue.
“After you have tremendous cuts, you end up having to have revenue,” Guinn said. “In 1993 after Miller did those cuts, he did the business tax. Bryan did it and we got $50 million from mining when he was there. I did it in 2003.”
He predicted the state will again find itself in that position after this biennium.
“It went down fast because of the housing situation but it never comes back that fast,” he said of the economy.
• Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.