Nevada governor tells agencies to cut $112 million from budgets

Wednesday, March 28, 2007 | 11:50 a.m.

CARSON CITY, Nev. - Saying he's concerned about weaker-than-projected tax revenues, Nevada Gov. Jim Gibbons told state agencies Wednesday to chop nearly $112 million from their budget requests now being considered by legislators.

The Republican governor said the cut directive went to all state agencies, although K-12 education, child welfare and transportation construction budgets won't be affected.

Gibbons also said the nearly $112 million is the amount that the state may not get in sales and business taxes over the next two fiscal years. The state's Economic Forum had projected in November that the state would get the revenue, but since then Gibbons said there are indications that the revenue will be "weaker than anticipated."

"We must live within our means to ensure a balanced budget," Gibbons stated. "Therefore, I am asking Nevada's state agencies to re-examine their budgets for possible reductions to ensure that we are exercising responsible management of taxpayer dollars."

Gibbons also said his budget chief, Andrew Clinger, and state lawmakers' fiscal staffers "agree that reductions will be necessary" to comply with Nevada's constitutional requirement for a balanced budget.

Senate Majority Leader Bill Raggio, R-Reno, termed the move "prudent action on the part of the governor at this point" in view of the expected revenue slump.

Revised revenue projections from the Economic Forum won't be out until May 1, about a month before a $6.8 billion state budget for the coming two years has to be approved by legislators.

Preliminary shortfall estimates were developed by Clinger and also the lawmakers' fiscal experts following a state Taxation Department report in early March that showed sales by Nevada merchants were up halfway through the current fiscal year, but tax collections based on the sales are slightly below projections.

For the first half of fiscal 2006-07, the state's cut of the sales taxes is running $2.7 million, or 0.3 percent, below the Economic Forum's November estimate.

Raggio said the big concern is that the state had been seeing double-digit gains in sales taxes but now those gains are "in single digits. There's no real disagreement at this time that when we get to the Economic Forum meeting the sales taxes are still going to be single-digit."

Another recent report showed that combined percentage fee collections from casinos so far this fiscal year are 1 percent, or $5.6 million, above the forum's forecast. The gaming and sales taxes are the two biggest revenue sources for the state.