Snip, snip and still short

David McGrath Schwartz, Las Vegas Sun

Saturday, Dec. 8, 2007 | 7:25 a.m.

There's a gaping hole that looks like more bad news for the Nevada budget.

Some quick math shows budget cuts requested by Gov. Jim Gibbons, if instituted, would save the state about $280 million in spending. But if the current revenue figures hold true, the state will still be short $90 million to $180 million.

To be sure, there are one-time expenses such as new buildings, computer systems and cars that could be put off. But officials acknowledge that if tax revenues continue to drag, the cuts being sought now won't be enough to balance the budget, as the state's constitution mandates.

Andrew Clinger, the state's budget director, said he doesn't think additional cuts will be requested of agencies that have already been asked to prepare for reductions.

"Right now, I don't think we'll go higher than 8 percent," Clinger said.

The legislature and governor could tap into the state's $285 million rainy-day fund early next year, once the legislature is in session. Gibbons has said he won't call a special session to tap the rainy-day fund, or raise taxes.

Gibbons has been walking a fine line since early projections showed less revenue coming in than expected. He initially called for departments to prepare 5 percent reductions, amounting to $185 million in savings. When bad news continued, he increased to 8 percent the amount of cutbacks necessary.

Since then, though, new tax numbers have come in, showing that state revenues are continuing to suffer. (Budget numbers vary depending on whom you ask. In the first three months of this fiscal year, tax revenue is either $46 million or $58 million below projections.)

Clinger said the state budget office isn't likely to complete its latest forecast until next week. Gibbons has said he won't announce what will be cut until January, when more numbers are expected to come out.

Carole Vilardo of the fiscally conservative Nevada Taxpayers Association said making budget forecasts is dicey business.

"What we're talking about is projections," she said. "You don't really know until the numbers come in."

Asking agencies to reduce spending when revenues are down is fiscally prudent. Ask for too much, though, and public sentiment can turn against a governor (note protests from university system Chancellor Jim Rogers and advocates of social programs).

If Gibbons doesn't ask for enough, though, he could be forced to hit departments again for more budget cuts.

"Asking for 10 percent cuts might have been better," Vilardo said. "There would have been a lot more yelling, but if you don't need 10 percent, you end up looking like a hero."

State Sen. Bob Beers, vice-chairman of the Senate Finance Committee and a fiscal conservative, pointed out that California Gov. Arnold Schwarzenegger has already asked departments to prepare 10 percent cuts.

"Is 8 percent adequate? I hope so," Beers said. "But if I was a state employee at the water cooler, I'd be worried about it going to 10 percent."