Gibbons to call special session, says shortfall close to $1 billion

CARSON CITY — Gov. Jim Gibbons will deliver a special State of the State address Feb. 8 to discuss the economy and propose steps to cover an estimated $1 billion shortfall in the taxes that fund state government.

During his 6 p.m. address, the Republican governor will set the dates for a special session of the Legislature at which he and Democratic legislators, with whom he has feuded over the past year, must agree on ways to plug the revenue shortfall.

“Just like families all across Nevada suffering to make ends meet, state government must live within its means,” Gibbons said in making his announcement Monday. “It is irresponsible to spend money we don’t have. The state simply must reduce spending. The time for legislative hearings and other delays has long since passed. It is time for decisive action and that is what I plan to do.”

But there’s a big hurdle standing in Gibbons’ way. He has yet to set an agenda for the special session. Gibbons, who has championed spending cuts and no tax increases, ultimately needs the support of Democrats, who control both the Senate and the Assembly, if any solutions are to be enacted. They will talk again Tuesday at their third closed-door meeting in an effort to iron out some of their differences.

The special session likely will come shortly before the end of February; the governor earlier asked state agencies, school districts and Nevada’s universities and community colleges to submit plans on how they would cut their budgets by 10 percent starting March 1.

Assembly Majority Leader John Oceguera, D-Las Vegas, said Friday that the Legislature would talk about the shortfall during a Feb. 3 meeting of the Interim Finance Committee and hold public meetings on weekends and evenings afterward to gather the public’s input on dealing with state budget problems.

Gibbons’ announcement comes after Friday’s determination by the Economic Forum, a group of five business leaders, that there will be a $580 million shortfall in the state’s two-year $6.9 billion budget between now and the end of the budget period June 30, 2011.

But the forum did not estimate the shortfall in all sources of taxes, including sales tax revenues that go directly to education, or the increase in the Medicaid caseload, the free health program for poor people.

Estimates are that sales taxes going to schools are about $250 million short of projections, while the state needs an additional $60 million to keep up with Medicaid growth and $9 million to cover shortfalls in the Temporary Assistance for Needy Families program.

And the Gibbons administration says this all adds up to about $1 billion.

Gibbons’ special session announcement quickly was met with concern from James Dean Leavitt, chairman of the higher education system Board of Regents.

In a letter to the governor, Leavitt said that if there is a uniform cut in state agency spending, that would be equivalent to a 20 percent hit on the already hard-hit Nevada System of Higher Education.

During the 2009 Legislature, state appropriations for the universities and community colleges were cut about 13 percent.

“This would be cataclysmic to the Nevada System of Higher Education,” Leavitt said about another cut.

In his letter, Leavitt asked the governor not to restrict the business that the Legislature will consider during the special session.

But Gibbons, in a news release, pointed out that under the state constitution, he determines what will be discussed at a special legislative session.

Gibbons will meet at 2 p.m. Tuesday with legislators to hear their suggestions on how to cover the shortfall.

During two previous closed-door meetings with legislators, he offered his ideas, including an education reform plan that would end a requirement that the state fund class-size reduction programs and full-day kindergarten in some schools.

Legislators already are resigned to the fact that they must make dramatic cuts in state programs, or cut wages of state employees, teachers, and university and community college faculty members and support staff.

“I think we have to do deeper cuts,” said Assemblyman Lynn Stewart, R-Henderson. “It is such a huge amount. Some are going to have to come from education.”

Stewart said he doubts there will be a move during the special session to increase any taxes since the gaming industry and businesses already are suffering because of the recession.

Assemblyman James Settelmeyer, R-Gardnerville, said legislators should consider canceling all programs the state has added over the past 10 years.

“We cannot afford them,” he said. “I sincerely hope there is a willingness (between Gibbons and legislative Democratic leaders) to come together and do what is right. But right now, I don’t see that.”

Both assemblymen said they prefer salary cuts to layoffs.

Assembly Speaker Barbara Buckley, D-Las Vegas, wrote Gibbons two weeks ago and requested that everything possible be done to avoid cuts to education.

She said the state needs to analyze all reserve and unclaimed property accounts, review agency cut proposals and collect all unpaid taxes.

In a legislative hearing Monday, Buckley said Nevada could create jobs by becoming a transportation, distribution, logistics and aviation cargo hub.

“We must bring new jobs to Nevada,” she said, noting that the state has low taxes and must do more to attract new businesses.

But Rosemary Vassiliadis, deputy director of McCarran International Airport, said the airport does not have “big cargo facilities” and its chief mission remains having the passenger capacity to “fill hotel rooms.”

More cargo facilities will become available in 2012 after Terminal 3 of the airport is completed, said Vassiliadis, who noted that 1,800 people are working on the project.

Vassiliadis declined to estimate the number of people who will work at the planned cargo airport at Ivanpah, set to open in 2020.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

Trending topics:

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• State of the State address
• state budget
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Comments

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1. RightWingExtremist Jan. 26, 2010 | 3:11 a.m. Report Abuse

   Well, there's that $1 billion the legislature passed...the one that Gibbons originally vetoed and they overrode......

2. smokey Jan. 25, 2010 | 11:36 p.m. Report Abuse

   Budgets cuts. Ha Ha. LV fireman get average $4000 weekly. Just for rolling up hoses,blowing horn and driving around in yellow trucks.When not at a fire time is spent watching tv, & shooting pool (8 ball side pocket).Love those union raises,longevity and cost of living $$$$$.
   Many thanks taxpayers and my union for the pay.If commissioners would cut 720 fireman salaries to normal $60,000 yr that would reduce budget by $11,520,000.

3. All American Jan. 25, 2010 | 8:50 p.m. Report Abuse

   I feel like I'm trapped in the song by Stealer's Wheel, " Clowns to the left of me, Jokers to the right and here I am, stuck in the middle with you " ! The Clowns being the Legislature, the Joker being the Governor and all the rest of working stiffs are jammed right in the middle !

4. Greg Jan. 25, 2010 | 8:36 p.m. Report Abuse

   I wonder if someone is going to interrupt his speech to call him a "texter".
   
   Beats liar, right?
   
   If Nevada wants to emerge early from it's economic shortfalls the gaming companies should comingle funds to get Governor Gibbons headshot shrink wrapped on every third cab, and even on one Southwest Airlines plane, ala the old Stardust showgirl (Akira?) years ago, and let's not forget the seapark whale as well which did very well for Southwest Airlines. Skytag should have that image on a major host hotel.
   
   Governor Gibbons should in rapid order have his own headliner show on the strip, similar to the Garth format, or Carrot Top.
   
   Governor Gibbons can come out with props, video clips and media clippings projected of all his sideshow stories while in Carson City. There can be open discussion, Q and A, T and A, guest appearances (Sherman Frederick comes to mind for the VIP opening), maybe even Ms. M for a substantial paycheck!
   
   LV visitors would LINE UP for these one man variety shows. Most production shows have an elevator, they can bring in the actual one from the Howard Hughes Center parking garage, and put the image on shirts and caps.
   
   All the regulars from Jackass could rotate in and out from time to time for special effect moments. Chris Angel?
   
   Maybe it would even help book-bring a teacher's convention to town. Ooops, can't use the word book in Nevada, four letters.

5. Tonja.Brown Jan. 25, 2010 | 8:06 p.m. Report Abuse

   So Gibbons how many more millions are you going to spend of the taxpayers money to defend the state in the illegal coverup of an innocent man? You knew the evidence was found that cleared Mr. Nolan Klein and you continue to cover it up and we contine to expose you and ultimately the taxpayers are paying the tab. Thus far it has cost the state nearly ONE MILLION DOLLARS to keep this conviction. How much is it costing now while Mr. Klein's case is still pending in the 9th Circuit court of appeals? You were given the documents that were found in the DA's file that cleared him of the crime and supports his claims in the 9th circuit. How much is going to cost the state in the long wrong by you covering it up. THE TRUTH SHALL SET YOU FREE! or at least save a few million to the taxpayers. VOTE GIBBONS AND MASTO OUT.

6. lol Jan. 25, 2010 | 7:15 p.m. Report Abuse

   hey raise taxes, go back to California where they tax you for everything - they are doing soooooo much better than us right.
   
   If your household budget is suffering, do you spend yourself into prosperity?

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