Governor lays out cuts: $895 million in cuts include closing NSP, more mining taxes
Gov. Jim Gibbons on Tuesday officially called for a special session of the Nevada Legislature on Feb. 23 to balance a state budget now $881 million short.
The list of budget cuts included in the proclamation and backup documentation projects $12.2 million in savings and 136 layoffs by shutting down the old Nevada State Prison in Carson City.
It also directs that corrections employees join the rest of state service in taking furloughs, which will rise from 8 hours unpaid leave each month to 10 hours.
Of the roughly 18,500 state employees, 2,709 are exempted from the furloughs, 1,923 of them in the Department of Corrections.
Almost none of the rest are general fund positions. They are primarily paid by federal money. Those in the Attorney General’s Bureau of Consumer Protection are funded by a mill tax on utilities.
All will now take furloughs. The consumer protection workers, according to assistant attorney general Jim Spencer, have been taking furloughs despite the exemptions.
For the federally funded employees, Director of Administration Andrew Clinger said they will take furloughs and the money saved will be used in operations or to hire more workers in critical posts so that it doesn’t go back to the federal government.
The list also includes several revenue raising proposals – the largest of which is eliminating numerous tax exemptions now allowed mining companies. The mineral tax changes would generate an estimated $50 million this two-year budget cycle.
Gibbons also called for changes to force collection of sales taxes on Internet purchases. There was no estimate how much revenue that would produce.
Gibbons rejected the suggestion that those proposals constitute tax increases.
“These are not new taxes. They are already required to pay those taxes,” he said of the Internet tax. “Businesses conducting business in the state of Nevada are actually escaping those taxes.”
Of the mining tax, he said the plan involves “closing loopholes, not raising taxes.”
“We’re clarifying the deductions they are allowed to take.”
Mining Association Director Tim Crowley said he believes mining as well as other businesses will have to participate in solving the budget crisis.
“In the end, there will be some kind of package that will probably include mining,” he said.
Health and Human Services Director Mike Willden said some of the cuts he worried most about were restored in his budget, including 77 welfare workers and caseload growth for supported living programs for the disabled and mentally ill.
Director of Corrections Howard Skolnik said he believes the furloughs are “doable” in the prison system but will require rolling lockdowns of prison units, reduced visitation and closing towers on a rotating basis.
DMV Director Edgar Roberts said his agency will almost certainly take advantage of the proposal to allow staff to work four 10-hour shifts weekly, which may result in closing DMV offices on Mondays.
The proposal hits school districts and the university system not only for the 10 percent cuts imposed on other state agencies but for an additional 1.75 percent reduction in payroll. With the 4 percent cuts the university system and school districts budgeted this year – but didn’t implement – that raises those entities to the same 5.75 percent overall pay cut faced in the rest of state service. That will cost the university system $9.5 million and public schools $35.7 million.
Director of Administration Andrew Clinger said it will be up to the system of higher education and the districts whether to meet those cuts with lower salaries or layoffs. To give them more flexibility, however, the proclamation includes removing mandates now imposed on school districts for such things as class size reduction, books and equipment spending and full day kindergarten, giving them much more flexibility to handle the 10 percent budget cuts they face.
The universities get another hit, however, as the plan takes about $12.7 million currently budgeted for them through the Millennium Scholarship program. There are currently some 20,000 students attending college on that scholarship.
The detailed proposals include sweeping any and all possible money from numerous reserve and other accounts as well as outright transfers of money from the Millennium Scholarship Fund, Public Health Trust Fund, Unclaimed Property and the Fund For a Healthy Nevada.
State payments for retired employee health insurance would be suspended and the retiree group investment trust tapped for the $14.7 million that would cost.
The governor’s proposal would take $35 million from the Department of Taxation’s surety bond account, which is funded by bonds required of numerous businesses to operate in Nevada. The danger there is that those businesses are entitled to get the money back under certain circumstances.
The plan would also take most of the Insurance Insolvency Fund which protects people with insurance claims if their company goes under. It would take almost all of the Wildlife Heritage Fund which hunters pay into to protect and manage game in the state.
The plan would generate just under $11.3 million by giving the state a state benefits plan premium holiday one month. The premiums would have to be made up from the plan’s reserves.
In addition, the plan envisions collecting $30 million next year by having the company Insurenet install cameras on roadways around the state to catch unregistered vehicles. Deputy Chief of Staff Lynn Hettrick said actual revenues from that program should be much higher since an estimated 22 percent of the vehicles on Nevada roads are believed unregistered.
Altogether, the proposals total about $895 million in cuts or revenues generated to cover the budget shortfall this budget cycle.
While Gibbons said lawmakers are aware of nearly everything on the list, they have some disagreements that will have to be worked out.
One of those is his call to repeal collective bargaining for local governments and school districts, which lawmakers have refused to even draft into potential legislation.
Chief of Staff Robin Reedy said the proclamation is just the first take on what lawmakers will have before them when the special session convenes. She said other elements are still being worked out and that additional proclamations can be expected in the coming week.