"Education (kindergarten through 12th grade), public safety, corrections and children's programs will not be cut. We will have to make steeper cuts in other state agencies."

If Gibbons made that commitment to legislators and local government leaders during budget talks last week, Clark County Commission Chairman Rory Reid missed it. During the meeting, Reid unsuccessfully pressed Gibbons for a promise to preserve the $3.6 million in county child welfare and juvenile justice budgets up for cuts.

"I didn't have that understanding," Reid said Tuesday. "I'm happy the governor made that decision. Obviously I think it's the right one."

Reid followed up on the importance of protecting child welfare funding in conversations with members of the governor's staff last week, emphasizing the consequences of budget cuts.

Without the money to hire additional staff, reduce caseloads for Clark County Family Services workers and offer better training, meeting federal improvement goals for Nevada child welfare would be next to impossible, county officials have said.

The cuts would have meant that 59 of the 85 new child welfare positions approved by the Legislature this year would not be funded. At the meeting, Reid reasoned that because public education was to be spared from cuts, child welfare programs should be spared, too.

"No decision has been made in that area," Gibbons said in response to Reid at last Wednesday's meeting. "My goal is to minimize any impact on services to children."

Tuesday's declaration ends a standoff between the state and Clark County that began last month.

At the governor's direction, state Health and Human Services Director Michael Willden asked county officials to list where children's services could be cut. The state agency channels state money to Clark County for children's programs.

Reid and other Clark County officials refused to prepare the list, maintaining that children's programs were too important to cut.

The budget uncertainty also prompted Clark County commissioners to delay renewing a contract with the state for the provision of child welfare services.

The contract made no funding guarantees but sought to make Clark County responsible for federal penalties that might result if Clark County Family Services fails to meet improvement goals.

"This is going to go a long way to bringing our caseloads down to safer numbers," Family Services Director Tom Morton said Tuesday. "This is absolutely good news."

In Clark County, Family Services caseworkers, who track children who have been abused and neglected, oversee 40 cases each on average at any given time.

Morton said that he hopes to bring that average down to about 26 or 27 cases per worker. He said that once he obtains formal notice of the governor's intent to preserve child welfare funding, he will proceed with recruiting and hiring the additional staff.

"We have people here who've been hanging on by their fingernails," Morton said of his child welfare staff.

"They've been holding out for relief, and they'll be heartened to know the governor has taken this position."

Donna Coleman, a child advocate who has been one of the most vocal critics of Clark County's services for abused and neglected children, welcomed Gibbons' decision.

It places the onus of improvement back on Clark County's shoulders, she said.

"Now the heat is on," Coleman said. "We've put our money where our mouth is. Let's see if they can deliver."

The pressure to reduce state budgets by 5 percent results from a shortfall in projected state revenues.

On Tuesday, Gibbons also expressed hope that the economic downturn might not be as severe as expected. Gaming revenue figures for September, released Friday, showed a 7.45 percent improvement from the same month in 2006. The increase was higher than projections.

"Gaming is keeping us together," Gibbons said.

What has crippled the state government is the drop in sales tax revenue. Budget Director Andrew Clinger predicted that sales tax revenue alone will fall $285 million below projections by the end of the two-year budget period on June 30, 2009.

He attributed the drop to the 50 percent decline in home purchases. Along with not buying homes, Nevadans have curtailed purchases of big-ticket items such as furniture, durable household goods and motor vehicles.

Economists do not expect the housing market in Nevada to rebound before 2009 or 2010.

Clinger said Tuesday that he will not receive reports on first-quarter tax revenue from the real property transfer and business payroll taxes until early December.

The real property tax was projected to bring in $124 million during the current fiscal year. The state collects a tax of $1.30 for each $500 value of property sold in Nevada. With homes sales off dramatically, the tax probably will come in far short of expectations.

The business payroll tax also might be short. Nevada had been the national leader in job growth for several years, increasing its work force by about 6 percent a year. But analysts said last month job growth now is down to 1.7 percent growth.

Because of the uncertainty of the taxes, Gibbons warned during his summit with state and local leaders that he might have to cut state government spending by more than $285 million.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or (775) 687-3901. Contact reporter Lisa Kim Bach at lbach@reviewjournal.com or (775) 383-0287/