Columnist Jon Ralston: Guinn must deal with worsening economy

Wednesday, Sept. 19, 2001 | 9:06 a.m.

Jon Ralston hosts the public affairs program "Face to Face" on Las Vegas ONE and also publishes the Ralston Report. His column for the Sun appears on Sundays and Wednesdays. Ralston can be reached at 870-7997 or by e-mail at ralston@ vegas.com

EXACTLY TWO WEEKS AGO Gov. Kenny Guinn told state Budget Director Perry Comeaux that they needed to sit down to talk about declining revenues.The governor, who loves to pore over figures and more figures, was worried. "Revenues were not up to projections," Guinn remembered thinking, and he and Comeaux needed to begin "looking at where we were going."

Then, less than a week later, those planes-become-missiles exploded on the East Coast, causing not just horrific human carnage but hurling economic shrapnel across the country. And now as casinos fret about plummeting occupancy rates and the airlines industry teeters on the precipice of financial collapse, the governor confronts a budget hole that has gone from great to gargantuan.

You can talk about Las Vegas' resilience in the wake of the Gulf War. You can pray that Californians keep speeding up I-15 and I-80 to Nevada gaming markets. And you can insist that all of this is ephemeral, that all will return to normal soon.

But Nevada, like the country, is about to visit a place it never has before, where frequent flyers are afraid to fly, inveterate gamblers find a way to kick the habit and determined drivers become couch potatoes.

As Guinn pointed out this week, he and others already knew revenues were off and would be off. Not only because no one had the courage to reform the tax structure to make the hard landing a little softer. But with other factors, including July 4 being in the middle of the week, gaming revenues have not been robust. And now the revenue that fuels state government and all its services, from education to mental health to welfare, is tanking. For how long, no one knows.

So for Guinn -- and soon lawmakers -- this will come down to a Hobson's choice: Cut the budget because projections will be so out of whack, thus eviscerating services that are already underfunded, or raise taxes in an economy that many believe already is in recession.

"We are going to have to take some dramatic steps," Guinn said this week. What steps? He doesn't know yet, but he plans to meet next week with legislative leaders, including Senate Majority Leader Bill Raggio and Speaker Richard Perkins, to discuss options.

"By next week, we'll have our figures and we can talk about what I'm going to do," Guinn said.

A special session? The governor, who considers the Gang of 63 a necessary (barely) evil, hopes that doesn't become necessary -- although some chief executives would love to spread the responsibility for the tough decisions to other state policymakers. Lawmakers, except the more zealous ones and those without lives outside their elected jobs, will be loathe to get involved and will be happy to let Guinn apply the budget knife.

Guinn, like his friend in the White House, could perversely experience a political boost if he shows leadership during what could soon loom as an economic crisis in Nevada. All he has to do is look deliberate and sound compassionate and he's there -- those are natural qualities for him.

The gamers will believe, as Harrah's Jan Jones and the Culinary's D. Taylor said this week in an interview, that this crisis takes a casino tax increase off the table. Both, especially Taylor, said they were optimistic, though, that the catastrophe will catalyze Guinn and others to take action on the budget/tax structure question.

No matter what he does, Guinn knows that the state must act with alacrity. "We cannot let it go and let it go," he said.

That's because unlike the unpredictable events of last week, everyone knows what's coming if Guinn and/or state legislators don't act -- and they've known it for a long, long time.

Even without the terrorist attacks, tough choices would have to be made. Now, because of a narrow tax structure dependent on an industry that is dependent on airlines and the tourists they bring, those choices will be even tougher and bring even more pain.