Budget meeting produces no solutions

Thursday, June 12, 2008 | 12:06 p.m.

CARSON CITY -- Gov. Jim Gibbons met with legislative leaders Thursday to talk about the growing deficit facing the state but they didn't come up with any solutions.

"Everything is on the table, including a special session" of the Legislature, Gibbons, who in the past opposed a special session, said after the closed-door meeting.

But Senate Majority Leader Bill Raggio, R-Reno, said he opposed a special session, adding: "Nobody is going out and raising taxes."

With its declining tax revenue, the state will be an additional $60 million in the hole in the fiscal year that starts July 1. Gibbons said the deficit may be close to $1 billion in the following two fiscal years.

One suggested solution -- to withhold the 4 percent cost-of-living raise for school teachers, university employees and state workers -- got little support.

Senate Minority Leader Steven Horsford, D-Las Vegas, said he opposed suspending the salary increase. And Raggio said nixing the raises would "put salt in the wounds" of government workers who, like others, are facing $5-a-gallon gasoline and other inflation.

Gibbons said a special legislative session would have to be called to stop the pay raise or to order a four-day work week for state employees, another possibility.

Assemblywoman Sheila Leslie, D-Reno, suggested state officials work with the Nevada congressional delegation to pull back new federal regulations on Medicaid. That could mean an immediate $34 million in federal funds to the state, more than half of the next fiscal year's $60 million shortfall.

A proposal by Lt. Gov. Brian Krolicki to use tobacco money that now finances Millennium Scholarships was roundly criticized. Under that plan, the state would issue bonds to raise an immediate $600 million and use the tobacco funds, derived from the settlement of a nationwide lawsuit stemming from the health dangers of smoking, to pay off the bonds.

Gibbons said that proposal "could be costly to the state," adding that he was concerned about using "one-shot" money to meet a continuing problem.

Leslie, calling the Krolicki plan shortsighted, said it would never be approved by the Democratic-controlled Assembly.

And state Treasurer Kate Marshall said Krolicki has refused to share with her the figures she to judge if the proposal is workable. Attorney General Catherine Cortez-Mastos also raised legal questions about the plan.

State agencies already have cut 4.5 percent from their budgets. Officials have said another 1 percent reduction might be needed next fiscal year.

Horsford said he opposes any across-the-board cuts, which hit the public schools and human service agencies the hardest.

"The economy is not a partisan issue," Raggio said. "Everybody has to tighten their belt. Everything is on the table."

He said rather than calling a special session the Legislative Interim Finance Committee could work with the governor on the issue. The committee, composed of members of the Assembly Ways and Means Committee and the Senate Finance Committee, meets between sessions to handle budget matters.

Among others who participated in the meeting via phone were Assembly Majority Leader Barbara Buckley, D-Las Vegas, Assembly Minority Leader Heidi Gansert, R-Reno, Assemblyman Morse Arberry, D-Las Vegas, and Assembly Majority Leader John Oceguera, D-Las Vegas. Krolicki phoned in from Hong Kong, where he was attending a tourism meeting.