Vol. 5, No. 3
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December 1, 2007
Nevada's Online State News Journal
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Governor Calls For
Larger Budget Cuts
No New Taxes, No Tax
Hikes, He Says
Nevada's economy may be in worse shape than originally feared according to Governor Jim Gibbons as he called for budget cuts of up to eight percent from the current biennial spending document. The call raised immediate complaints from University System Chancellor Jim Rogers who feels it is time for new taxes. The governor ran on fiscal responsibility and says he will not support new taxes or hikes in current taxes. Rogers in turn says he will not cut the university budget by a dime.
The latest figures out of Carson City put the alleged shortfall at $285 million due in part to the current housing and mortgage lending fiasco, primarily in Clark County although affecting northern Nevada as well. A lack of building construction has also led to a dip in the sales tax, which brings in about one third of the state's funding. Gaming revenue has been holding steady but the budget was formed on projections of large increases in both sales and gaming taxes. Nevada's constitution demands a balanced budget, the state cannot run in the red, which leaves just the two options for the governor: new or raised taxes or agency cuts in spending.
Gibbons had called initially for a five percent cut in spending by each state agency but when new figures were released, he said, the cut would have to be at least eight percent. Democratic legislative leaders are against budget cutting and are calling for new or raised taxes, and the spending of the state's rainy day fund. Chancellor Rogers has opposed almost every attempt by the governor to balance the current budget.
Republican legislative leaders such as Assemblywoman Heidi Gansert (Reno) have called the governor's plans "prudent." The legislature prepares a two year budget in fiscal year stages, and the second year of the current budget calls for more spending than the current fiscal year which has many in state office fearful. The two year budget is a whopping $6.8 billion, almost $1 billion more than the previous budget.
Some of the other cuts that are being discussed by state financial heads are construction projects and hiring freezes letting attrition cut salary expenses. The governor said he does not want cuts in public education funds, prison system funds, and public safety funds. He has made those agencies exempt from his cuts. According to the budget director, the governor has also exempted children's services from budget cuts.
In the meantime the unemployment figures for October show an increase in unemployment in Nevada. The state figure stands at 5.2 percent compared to the national average of 4.7 percent and California's 5.6 percent. In Las Vegas, the unemployment rate in October was 5.1 percent and in Reno, 4.5 percent. “On the surface Nevada’s September labor market data painted a somewhat mixed picture, but a continuation of recent trends was evident,” said Bill Anderson, chief economist for the Department of Employment, Training & Rehabilitation. “The state added jobs at a modest pace, while unemployment rates remained on a slow upward climb.”
The holiday shopping surge has begun in Nevada and at this time it is too early to tell if the sales tax figures will rebound enough to match projections. Usually an increase in unemployment is reflected in a decrease in sales tax revenue.
At least one agency has already responded to the call for budget cuts as the Supreme Court has returned $2.5 million from its appropriation. That amounts to about 24 percent of their $10.5 million budget. Chief Justice Bill Maupin said that he anticipates returning even more during 2008. The governor had suggested a cut of about $500,000.
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