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BALANCING ACTS: Nevada is not alone -- budget shortfalls force cuts, tax hikes in all but three states

Legislature weighs tax hike options










CARSON CITY -- North Carolina Gov. Beverly Perdue infuriated state worker groups last month when she signed legislation cutting salaries for teachers and state employees by 0.5 percent.

That was her way of handling North Carolina's budget problems. Of course, each employee later this year can take a 10-hour paid furlough to help make up for the pay cut.


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  • "We can only wish we had those problems," said Nevada Senate Taxation Committee Chairman Bob Coffin, D-Las Vegas.

    Even if Nevada might be envious of North Carolina's relatively mild budget woes, the Silver State's pain is still being felt by the vast majority of states.

    The Center on Budget and Policy Priorities, a group that monitors state spending, said in a report last month that 47 states face funding shortfalls that are expected to increase in the fiscal year that begins July 1 and continue into 2011.

    Only Wyoming, Montana and North Dakota have been immune to the current recession.

    Nevada's revenue shortfall has been calculated as the nation's largest in terms of percentage.

    The state and its counterparts are struggling with very similar challenges -- where to raise taxes, where to make cuts -- and often are considering the same fixes. Increase sin taxes. Plug holes with stimulus funds. And across the board, pay cuts are a contentious issue.

    Legislative budget committees in Nevada decided last week they had no choice but to decrease teacher pay by 4 percent because of the revenue gap now estimated at 44 percent, or upwards of $2.5 billion.

    They also decided Nevada state employees will receive 12 unpaid furlough days, equivalent to a 4.6 percent pay cut.

    The entire Legislature has yet to approve the cuts.

    In Idaho, teacher salaries were cut by 2.6 percent and administrator pay by 5 percent. Legislation was approved to authorize school districts to reopen contracts with teacher unions and attempt to negotiate down benefits because of a financial emergency.

    In Arizona, the Legislature has yet to decide whether to approve a plan to cut public education by 5 percent.

    Nonetheless, in anticipation of the cut, the city of Tucson announced it will lay off 600 teachers next fall. The Phoenix suburb of Mesa plans to lay off 200 teachers.

    Los Angeles teachers plan a strike this week to protest a $600 million cut by the local school board that will result in layoffs of 5,400 teachers.

    And teacher pay has been cut by individual districts in Georgia, usually by about 2 percent.

    In Oregon, Gov. Ted Kulongoski asked teachers work five days for free, or he would shorten the school year. School districts then found enough money to pay teachers for the full year.

    Fourteen states already have increased taxes, said Nick Johnson, an analyst for the Center on Budget and Policy Priorities.

    Twenty others are giving serious consideration to tax hikes.

    Johnson's group found that states on average are covering 40 percent of their deficits by plugging in federal stimulus funds. Those funds will run out by 2011.

    "Hopefully, the economy will rebound," said Johnson, whose organization analyzes how state and local programs affect low and moderate income people. "I don't want to think about what we will do if the economy doesn't improve."

    Arturo Perez, an analyst with the National Conference of State Legislatures in Denver, said stimulus funds "obviously are a way to fill the hole, but they are gone in two years."

    Nevada is expected to receive no more than $357 million in stimulus funds that can be applied to the general fund revenue shortfall, a fraction of the revenue gap.

    Perez said another favorite way to cover budget shortfalls is to raise cigarette taxes. Three states raised such taxes in recent weeks, and he expects many more will by July 1.

    Nevada now levies a per pack tax of 80 cents and has legislation pending that would add an extra buck to that amount.

    Even at $1.80 a pack, the tax would be lower than that in New York, Alaska, Washington and many other states.

    Nevada Gov. Jim Gibbons has threatened to veto any new taxes proposed by the Legislature.

    He has a soulmate in fellow Republican Gov. Linda Lingle of Hawaii.

    She vowed last week to veto $278 million in tax increases -- mainly cigarette and room tax proposals -- passed by the Democrat-dominated Legislature. The taxes would be used to offset state employee salary cuts.

    But it's not only Republican governors who threaten to veto tax increases.

    Ohio Gov. Ted Strickland, a Democrat, has vetoed bills to restrict tax credits on the grounds they're needed to help business during the current recession.

    "I continue to believe that increasing taxes on Ohioans during this national economic downturn would deepen the effects of the recession in Ohio and hurt, rather than help, Ohio families striving to emerge from this recession," Strickland said in a recent message to the state auditor and Republican legislators.

    In Nevada, legislators are likely to increase taxes by $1 billion or more within the next 18 days.

    State Senate Majority Leader Steven Horsford, D-Las Vegas, said in a recent interview that budgets will be cut by more than $1 billion, but added there is a "shared responsibility" for the shortfall.

    All taxes remain under consideration for increases, according to Coffin.

    That includes cigarette, liquor and mining taxes. The state's current 0.63 percent modified business tax could be tripled, he added.

    "A lot can be done in the next two weeks," Coffin said.

    Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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    lol wrote on May 11, 2009 06:38 PM: "47 states face funding shortfalls"

    I thought the political power players keep saying we need a more stable tax system - IE , more taxes for the system. I guess they are all broken if almost all are having problems.

    I wish we had more intelligent people in Carson (like the Governor) that would only spend what they have, not just cry "broken system"


    TK wrote on May 11, 2009 06:26 PM: Raising taxes during a recession to close budget gaps is like driving faster so you wont run out of gas.


    BarneyFife wrote on May 11, 2009 04:59 PM: “I’m not going to give rooms away. That’s a heads-in-beds philosophy,” Ruffin said. “I don’t want the $50 customer.” 5/11/2009

    This says it all about Vegas and why we are so reluctant to come there anymore. The new owner of the TI no longer wants to even see the lower hotel guest like my family and relatives. My uncle used to stay there several times per year. He is a lousy gambler, but he enjoyed his stay, though he lost thousands trying to beat 21. I sent him Ruffin's quote. Now that Vegas might be slowly coming out of the abyss, the strip seems hell bent on barring anyone who is not a whale. I'm sure Paris Hilton will book a room there soon since there will be so many vacancies.


    Sal wrote on May 11, 2009 03:33 PM: yawn...the Legislature didn't go "running to the supreme court".

    Dandin; Nevada has a rainy day fund and used a lot of it to get through this fiscal year...we do not need to whore ourselves by storing nuke waste here in Nevada. Just read that 1/2 of al all businesses in Nevada do not pay the required $100 fee to the tax dept and 1/2 of all corporations fail to pay their annual secretary of state fee!


    yawn wrote on May 11, 2009 03:05 PM: The leadership is saying no more taxes, but the legislature isn't listening. So after they waste all this time coming up with a budget that will be vetoed, they'll just wait until the last minute again, then go running to the supreme court crying about the poor children, and the supreme court will once again trash our constitution and rule for the government. Almost like deja vu.


    Dandin wrote on May 11, 2009 02:03 PM: NV is in a deep hole because of A LACK of LEADERSHIP.

    NV Mining has one of the lowest tax rates in the nation, NV Gaming has one of the lowest tax rates in the nation, NV businesses have some of the lowest tax rates in the nation, NV tabacco and alcohol taxes are below average for the nation, and it goes on. But taxes alone are not the solution.

    It is just plain fiscally smart to have a decent "rainy day" fund, now where is Nevada's? Where is the LEADERSHIP?

    BILLIONS annually could be coming to Nevada by completing the Yucca storage site, charging for shipping nuclear waste to NV, requiring a nuclear waste reycling plant to be built on site, recycling the waste, requiring a nuclear power plant to be built on site to use the recycled nuclear waste, selling the power, then charging for storage of the recycled and re-used nuclear material with a shorter life and easier to store, and smaller amount left over. Technologically feasible and safe, despite the fears of the uneducated. More income than Alaska oil, which pays every long-time resident a couple thousand dollars a year interest from the Oil profits.

    Solutions are needed. Where is the LEADERSHIP?

    Education is at the bottom compared to other states, but what are the schools and communities doing to find solutions. Money alone is not the solution, as Utah spends less per student but has much higher test scores and graduation rates than NV.

    And the list goes on...bickering and fighting very seldom produces the best solutions.

    Where is the LEADERSHIP?


    MTS wrote on May 11, 2009 12:55 PM: Once again the Nevada Legislature is going down the same road that they do every session. Perhaps it won't be as bad as the horrendous 2003 session, but once again a small group of insiders is cutting deals in secret that will finally be presented for a vote as close to adjournment as possible so they can run out the door and head for home. This is all taking plcae despite the assurances by Buckley that it would be different this time. In the meantime, Legislators wasted no time acting on items im[ortant to them e.g. annual sessions. Why in the world - given the record of the Legislature - would Taxpayers want to have to pay even more for that bunch? The Nevada Legislature is an embarrassment.


    Virgil A. Sestini wrote on May 11, 2009 12:35 PM: I might add to my previous comments If we eliminated the disruptive, social misfits from our classes we just might be able to see education return to the schools.

    1. Cut the crappola with Special Ed kids. Most of them have been mis classified as handicapped,that is BULL! Too many of them are classified as having a handicapping situation...poor misbehavior is handicapping to all other students in class and the teacher.
    2. With removal of all the disruptive elements in class maybe, just maybe a teacher might be able to accomplish something.
    3. With removal of these problem makers there would be no need for 4-5 principals in a highs school. One princial and an assistant would be all that is necessary....plus all the specialists, mentors, etc would not be needed


    dr j wrote on May 11, 2009 12:17 PM: With the billions the state takes from casnios every year, save some of it for times like these! Create a permanent fund, like Alaska.


    Ned wrote on May 11, 2009 11:17 AM: Helen;

    Here is a list of the 55 different unions in Wyoming, population 563,000.

    wyomingunionsouttohurthelen


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