Tuesday, May 22, 2007 | 7:40 a.m.
Legislative negotiators tried to solve an impasse Monday over the state's K-12 education budget, the biggest point of conflict between the Democratic Assembly and the Republican Senate, as the Legislature's 120-day deadline wound down.
But while they worked behind closed doors, the rest of the state capital was consumed with what amounted to sideshows whose subtext wasn't policy, but, rather, the 2010 election.
There sat a nervous Lt. Gov. Brian Krolicki, who was surely pondering his political future during the release of a blistering legislative audit of his tenure as state treasurer.
Meanwhile, at the same exact time, Gov. Jim Gibbons met with reporters on a more pressing state issue - clogged roads - to again promote his plan, even though it has little to no backing in the Legislature.
For Krolicki, however, Monday was undoubtedly a white-knuckle experience. He's been talked about as a future Republican candidate for governor, which could be as soon as 2010 if the party decides to dump Gibbons, who's struggled with low approval ratings and an FBI investigation of his relationship with a defense contractor.
Treasurer Kate Marshall, a Democrat, had asked for the audit of Krolicki's handling of the Nevada State College Savings Program. She told lawmakers in March that $3.4 million of nearly $5 million in investment fees received by the state last year may have been improperly diverted toward marketing and legal expenses on Krolicki's watch as her predecessor.
In a related investigation, the state attorney general's office and the Nevada Public Safety Department are looking into the possible destruction of public documents in the state treasurer's office to determine whether any criminal wrongdoing occurred.
Krolicki sat in the front row Monday, behind auditors who testified before the Legislative Commission's Audit Subcommittee, his knees occasionally bouncing. In the opinion of legislative auditors, the report revealed that the college savings program seemed to have set up something of a black budget, using more than $6 million to pay for legal services, marketing and consultants without legislative oversight.
The auditor's report found the practices violated Nevada statutes.
"It sounds so simple: You'd expect the state treasurer to be using high-quality accounting practices," subcommittee Chairwoman Sheila Leslie, D-Reno, said. "But the word 'sloppy' comes to mind as an adjective."
Leslie, who received the report last week, seemed ready for Monday's show.
"We don't want to insinuate anything untoward, but when you see numbers like this it makes you wonder," she said in response to $80,000 in paid consulting fees categorized by the college plan's adviser as "out of pocket expenses."
As lawmakers peppered state auditors with damaging questions for about an hour and a half, Krolicki scribbled notes on a yellow legal pad. And, when his time came, he put them to use.
In a vigorous defense Krolicki said that he had acted on the advice of legal and accounting professionals - public and private, including the state attorney general's office - and that the contracts he engineered "adhered to the intent of the law."
"I really want to dwell on the good news," Krolicki said. "This is a dour moment because of the things we've heard."
"This has been balanced to the penny," he added. "That needs to be very clear."
And then: "I know where the buck stops and I'll take that responsibility."
But when asked whether he agreed with the finding that he had violated three state statutes, Krolicki defended his performance and denied any wrongdoing.
"I believe all of the contracts adhered to the intent of the law and the direction of this committee," he said.
Just as these questions were being raised about Krolicki, Gibbons sat around an oval table in his Capitol office, more than a dozen lobbyists standing off to the side. He looked reporters in the eye, not shying from questions, and affirming his "no taxes" stance.
With his poll numbers at 30 percent, he's tried to show leadership by pitching a fix for the state's roads that doesn't raise taxes.
His message differed little from that of two weeks ago, when he unwrapped a plan to pay for the state's $3.8 billion in highway needs over the next 10 years. The key and most controversial component of his plan asks to take money from the budget for the Las Vegas Convention and Visitors Authority.
The question was put to him: Who in the Legislature would back your plan enough to write it into a bill and try to get it passed? It's no small question, because powerful casino interests, and the LVCVA, have lined up strongly and firmly against his plan. Taking from the LVCVA's advertising budget - even if it's a subtraction from future increases - is seen as taking away from a vehicle that feeds the tourism-based economy.
"We've got a lot of people who've expressed support for these ideas," Gibbons said. "We haven't exactly selected an individual who will be the point person. To me it's not important to have a specific individual. It's important to get the bill out there, in the process and through the legislative process."
A number of legislators, including Republicans, have declared Gibbons' idea a dead one. And, given Gibbons' pledge not to raise taxes, any transportation plan that includes a tax or fee increase is also unlikely.
Still, the governor on Monday appeared decidedly more relaxed than the lieutenant governor.
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