Jon Ralston outlines what could happen in the state budget crisis that isn’t, at least yet

By Jon Ralston

Wednesday, Oct. 31, 2007 | 7:34 a.m.

Perhaps with all the yelling and screaming, you might not understand what all this fuss is about over the state budget.

With the stuck-pig syndrome in full-throated squeal, as local and state officials continue to wail about the hemorrhaging, it's hard to separate fact from rhetoric. So in my never-ending quest to shine a light into the darkness of how governmental decisions are made, let me provide a handy guide to FAQ.

Is there a budget crisis?

No. We are barely one-eighth of the way through the biennial budget cycle. It's too early to call it a crisis.

But thanks to the Gibbons administration's propensity to do even the right things the wrong way, it looks like a crisis. Gov. Jim Gibbons is rightly concerned about a couple of months of new fiscal -year data that indicate revenue , down about $22 million, is slowing .

But because the governor decided to hold a broadsword of Damocles over the budget in front of his Cabinet a couple of weeks back - a spreadsheet with possible cuts nine times the current deficit - he created a crisis environment.

(Oh yes, and the spreadsheet with 5percent cuts over two years somehow leaked and some mischievous media person posted it. Have to love the Internet.)

Why would the governor and his advisers decide to exempt lower education from any reductions but submit higher ed and child welfare to the knife?

It's possible they have no idea what they are doing. This is never to be discounted , based on the first year's work of Team Gibbons. But it's also possible they did this too quickly, without much thought and fairly simplistically. Which leads to the same conclusion: They have no idea what they are doing.

Does the governor really have the power to make the cuts without consulting state lawmakers?

Yes and no.

Right now, there are no cuts, but what the governor clearly can do under state law (NRS 353.225, if you are keeping score at home) is ask state agencies to reserve a certain amount of money. If revenue comes back, those reserves can be released; if the economy goes south, they become de facto cuts.

The Legislature has no say in this. But lawmakers might later, if a crisis actually occurs. There is another law, passed by lawmakers in reaction to Gov. Bob Miller's 1991 budget cuts, that triggers their involvement (Section 67 of the General Appropriations Act, Assembly Bill 628, if you are keeping score at home).

That section mandates that if the projected ending fund balance drops below $80 million (they don't have an estimate yet), the governor can order reserves of up to 15 percent - but only after preparing a report and getting approval from the Interim Finance Committee. The determination of a low ending fund balance would be made by the Board of Examiners, which is populated by Gibbons and two Democrats - Secretary of State Ross Miller and Attorney General Catherine Cortez Masto. Surely no politics would be played with such an important issue should it come to that board.

And there is this irony: If the governor sets aside enough money in reserves, he may be able to stop the ending balance from ever dipping below $80million and thus keep the Gang of 63 out of his business - if he so desires (as most governors do).

And before you ask, no, he can't just tap the Rainy Day Fund because it really has to be a fiscal emergency before he does so - unless lawmakers have a special session, which the governor has to call, to change the law.

So what can legislators do?

They are very good at talking. And complaining. And even whining. (Kind of like the media.)

But none of them really wants a hand in these cuts - they know the governor has the really difficult job and that's why few will call for a special session to join in the budget carnage.

So if the governor can do this on his own, why is he calling legislators and local government officials to Carson City on Nov. 7 for a meeting?

He's trying to look collaborative after how he handled the initial release. Alas, if you put too many politicians in a room - including mayors whose budgets are not even directly affected - you will probably get a lot of pontificating and not much action. Ultimately, Gibbons will have to make this decision , and if the numbers get worse, he will have to make someone angry.

Then there will be more yelling and screaming and time for a new FAQ.