Guy W. Farmer: Upcoming cuts will leave trail of tears
Now that the Nevada Legislature and Gov. Jim Gibbons have employed creative bookkeeping to dodge an imminent budget bullet, they should be thinking about what they’re going to do when lawmakers meet again early next year to confront a huge budget deficit that could cripple state and local governments.
“The stuff we just went through is easy compared to what we face in the next regular session,” said State Budget Director Andrew Clinger after last month’s special session. “The task we have in front of us is 10 times what we just did.” Clinger was referring to the $3 billion deficit the state will face in a $6 billion budget when the Legislature convenes again next February.
If your annual income was $50,000 and you owed $100,000, what would you do? That’s the dilemma our elected representatives will face next year. The solution is readily apparent: They’ll have to raise taxes and/or cut spending, but that’s easier said than done because many Nevadans clamor for governmental services while opposing any new or increased taxes.
According to the no-taxers, state and local governments should slash public services – including public education and police and fire protection – to the bone while retaining our state’s archaic tax structure.
Proceeds from gambling and tourism, which once provided more than half of our state’s general fund revenue, will continue to decline because of the current recession and the rapid expansion of California’s thriving Indian casinos, some of which are managed by Nevada gambling licensees.
And because Nevada doesn’t have a state income tax, municipal governments must rely on sales and property taxes to fund schools and police and fire protection. We’re feeling the squeeze here in Carson City as sales taxes and property tax assessments continue to rise. By the way, the dubious Nugget Redevelopment Project would mean yet another local sales tax increase.
Many of the temporary fixes enacted at the special session and signed by Gov. Gibbons will vanish by next February and lawmakers will be right back where they started. They’ll undoubtedly have to consider unpopular measures such as a sales tax on services, a corporate income tax on out-of-state corporations and tax increases on gambling and/or mining. At the same time they’ll need to consider drastic spending cuts in Medicaid and public education (including major cuts to the university system) along with state employee layoffs and furloughs, and reductions in their health and retirement benefits.
Although most of these measures are extremely unpopular, the 2011 Legislature must summon the courage to make these difficult decisions if the Silver State is to remain solvent and avoid bankruptcy.
• Guy W. Farmer, of Carson City, is a semi-retired journalist and diplomat.