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More budget cuts may be ahead

For legislative leaders and the governor, Thursday morning’s budget meeting was deja vu all over again as Director of Administration Andrew Clinger advised them revenues will fall another $60 million short of previous projections.

That raises the shortfall this biennium to at least $970 million, prompting Gov. Jim Gibbons to say all options are on the table ” including the special session he has previously tried so hard to avoid.

Clinger said this will be the first year in 30 that actual general fund revenue collections will be less than the previous year.

The meeting was originally called to discuss Lt. Gov. Brian Krolicki’s idea of giving up the rights to Nevada’s tobacco settlement payments for a one-time pot of money. Participating by phone from Hong Kong, Krolicki estimated the state could get from $600 million to $770 million by having investors buy the rights to the $1.25 billion Nevada is expected to receive over the next 17 years.

But there was reportedly little appetite for the idea among those in the room. Treasurer Kate Marshall got into a dispute with Krolicki after he refused to give her his back-up materials showing how he calculated those figures.

She said she can’t evaluate the plan without knowing the assumptions he made.

Attorney General Catherine Cortez Masto said there are legal issues to consider as well. And questions were raised whether securitizing the tobacco money would damage the state’s bond rating, potentially costing millions more.

Assemblywoman Sheila Leslie, D-Reno, said the plan “raised a lot of red flags.”

“I really think that is a short -sighted solution,” she said.

She said she doubts the plan will materialize, since it has minimal support even from the governor.

“You’re using one-shot money to solve an ongoing problem,” the governor said, adding the plan does nothing to fill the nearly $500 million a year shortfall for the next two-year budget cycle.

In addition, taking the revenue stream away would seriously damage programs now funded by the tobacco money, including senior services such as Senior RX, health programs and the Millennium Scholarship.

Krolicki said in a phone interview the plan would help “triage” Nevada’s fiscal problems this year.

Leslie urged the group to make a unified push to get Nevada’s congressional delegation to prevent next year’s decrease in the state’s Medicaid match rate. The 2 percent decrease in that rate to an even rate of return will cost Nevada about $24 million in fiscal year 2009. Leslie said if Nevada’s delegation can fend off next year’s reduction, it would cover a large portion of the $60 million added shortfall.

Senate Minority Leader Steve Horsford, D-Las Vegas, said lawmakers considered changing the state work week from five days to four 10-hour shifts and shutting down most services the remaining day.

He said there was resistance to the idea, “but we need to at least look at what it would save.”

Horsford said that might prove popular to workers who would have a three-day weekend and save gas and other expenses the extra day.

Gibbons said he would study the idea.

“One of the great silver linings of this very dark cloud is the ideas that come forward,” he said.

Some of the ideas include rolling back the proposed 4 percent cost-of-living raises for state workers.

Senate Majority Leader Bill Raggio, R-Reno, said those kinds of changes would require legislative action. He said for this year, he believes the budget can be balanced without a special session.

A special session would be especially unpopular with legislative and other incumbents running for office since they are legally barred from raising money from the day after the governor calls a special session until 15 days after it concludes ” potentially as long as 45 days. In addition, campaigning for lawmakers, especially for those who live in Southern Nevada ” is severely curtailed by being in session in Carson City.

Raggio said in any event, it would be very difficult logistically to get a special session done in the two weeks remaining before those raises take effect. Reno Republican Assembly Minority Leader Heidi Gansert’s idea to take back the 4 percent cost of living raises for state workers and teachers would save the state $62 million ” about the same as the latest additional shortfall. But most of that amount has already been committed to teachers through collective bargaining.

The budget cut issue was first brought up primarily because of the sales-tax shortfall. Clinger said the issue now includes gaming tax revenues, which, as of April, are $32.8 million behind the estimates made in March and $70 million behind the forecast used to build this two-year budget.

Sales tax revenues were actually $3 million ” a half percent above the dismal March projections.

Each accounts for nearly a third of total general fund revenues.

Cigarette taxes, the modified business tax, commercial recordings and the liquor tax are all faring better than projected in March. Real property transfer taxes, the live entertainment tax and insurance premium tax are behind their projections.

As of this month, Clinger said actual revenues are just under 1 percent — $26.4 million — behind the March projection. Each full percent is worth $32.1 million to the state treasury.

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