Further cuts in state’s spending feared

Tuesday, Nov. 13, 2001 | 9:39 a.m.

CARSON CITY -- Further cutbacks in state spending may be needed to offset lagging tax collections, Gov. Kenny Guinn says.

The governor has already put a freeze on hiring the new positions created by the 2001 Legislature, but he said Monday, "I'm afraid that is not going to do it," to maintain a balanced budget.

Guinn will get a clearer idea later this week, when sales tax collections for September are released. "By Wednesday or Thursday, we should have a better handle," the governor said.

The state Gaming Control Board reported last week that collections of the casino percentage tax fell by 10.8 percent in October or $5.5 million when compared with the previous year.

Gaming tax collections for the first four months of this fiscal year are down 2.1 percent, or about $3.9 million.

Gaming and sales tax combined to make up more than 75 percent of the revenue collected by the state.

The report from the state Taxation Department, expected late this week, will be the first since the Sept. 11 terrorist attacks.

"Generally speaking, sales tax parallels gaming," Guinn said.

The governor did not detail where spending may be further curtailed.

"Everybody is cooperating," he said. His $3.8 billion two-year budget was built on a system of priorities. If reductions are made, he said, they will come from the bottom of the list.

He said he hoped he won't have to call a special session of the Legislature to provide a solution.

Nevada is not alone in facing a money crunch.

A survey by the National Conference of State Legislatures showed state governments were facing some of the deepest budget shortfalls in at least a decade. The study, released earlier this month, said the downturn in revenue collections started even before Sept. 11.

With 44 states reporting, the conference said collections had dropped below forecasts made months ago. Nineteen states were spending more than they had budgeted.

Guinn huddled with other Republican governors last week in Las Vegas. "They're hurting too," he said.

While the gaming tax is down only 2.1 percent in the first four months of collections, the state had forecast a 4.5 percent increase. The state's budget is built on that assumption. Guinn said that adds up to a 6.6 percent hole in the budget.

The sales tax is critical, Guinn said. If it doesn't meet its projections, there is a double whammy -- to both the state and to school districts, which also rely on the sales tax.

If the collections come in under the estimate, Guinn said the state not only suffers from the shortfall, but it also is required to make up what the school districts lost. "It's a double hit," he said.

Guinn, who has spent much of the past three weeks in Las Vegas, said that "this weekend looked great for the Strip." The Comdex convention "is down a little, but it is still huge. It will help us during the week."

The state ended the past fiscal year with some extra money that was not expected, he said. That should cushion some of the downturn in ongoing revenues. But it may not be enough to forestall further reductions in state spending.

The governor also hopes to name a tax study committee this week. He said he has met with Senate Majority Leader Bill Raggio, R-Reno, and Assembly Speaker Richard Perkins, D-Henderson, both of whom will make two appointments to the committee.

The Governor's Task Force on Tax Policy is to study how to develop a broad-based tax structure and wean the state from its heavy reliance on the gaming industry.

The resolution creating the task force is charged with reviewing the taxes on gaming gross receipts, mining, property, sales or services, business profits, employees of business, slot route operators and car rental companies.

It also must look at the possibility of reducing the state's sales and use taxes over time as new tax revenues become available.

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