Nevada looking at red ink, pink slips

David McGrath Schwartz

Wednesday, Nov. 28, 2007 | 7:16 a.m.

Unspoken so far in the discussion of state budget cuts is the L-word - "layoffs."

But state government officials say that for the first time in 15 years, the government workforce could be cut - not just by leaving vacant positions unfilled but by laying off state workers.

The last time the state laid off employees was in 1991.

Department heads have until next Wednesday to present Gov. Jim Gibbons with proposals cutting 8 percent of their budgets. The governor's office won't decide which cuts to implement until January, the office said.

Gibbons initially asked most departments to prepare 5 percent reductions based on early word that sales tax revenue had come in lower than expected.

Although the 5 percent cut caused consternation among the rank and file, department heads were able to meet that benchmark without laying off workers.

But then came the call to prepare plans to cut 8 percent of budgets after the state's financial outlook grew gloomier with updated revenue figures.

"We could do 5 percent with no layoffs, but we've gone about as far as we can go without considering layoffs," said one state administrator, who asked not to be named because of the state's position of not releasing details of the budget plans.

"We're fearful," said Dennis Mallory, the Northern Nevada lead organizer for the state employees union, the American Federation of State, County and Municipal Employees.

He believes most departments would be able to make the cuts without layoffs. But the Health and Human Services Department is targeted for the biggest cutbacks, having been told to prepare for $140 million in trims over the next two years.

"It doesn't make any sense in laying off staff," Mallory said. "These are people who are going to be applying for benefits from the state when they're laid off and it's going to create more problems."

He said many departments are already short-staffed and called on the governor to look at tapping the state's rainy-day fund.

Mike Willden, director of Health and Human Services, said his staff hopes to meet the 8 percent target by leaving unfilled positions vacant, cutting capital improvement projects and delaying the start of new programs. But, as in many other departments, personnel accounts for the largest part of the budget.

"Certainly layoffs are the last thing we want to do," Willden said. "I wouldn't be truthful, though, if I said it was not being considered."

Andrew Clinger, the state's budget director, said it is impossible to know now what will be cut and whether layoffs will be included.

But he said 80 percent of most states' budgets is payroll.

"It would be difficult to cut 8 percent without personnel being affected," he said.

State Sen. Bob Beers, a fiscal conservative, said he believes that given the increase in state spending during the past few years, there should be enough cushion in the budget to avoid layoffs.

"Even with the shortfall, by all measures we're still producing more money than the last biennium," he said.

A clearer picture of the state's fiscal situation should be known later this week as some key tax revenue figures, including revenues from the payroll tax, the property transfer tax and the insurance premium tax are released.

But employees are likely to have an anxious holiday season. The state's budget office has refused to release earlier plans of what the cuts could entail. A memorandum last week from Clinger instructed state agencies that the recommendations to be delivered by the close of business Dec. 5 should "remain confidential."

In 2001, then-Gov. Kenny Guinn considered layoffs after the 9/11 terrorist attacks, but opted against them.

Bob Miller was the last governor to go through with giving employees the pink slip. In 1991, the Democratic governor laid off 266 workers. Many of those laid off worked with the mentally ill. Critics say the state's mental health system is still trying to recover.

Gibbons has exempted public safety, corrections, fire suppression and K-12 education from budget cuts - a protection he later extended to the child welfare and juvenile justice systems.