The Associated Press

Wed, Apr 9, 2008 (6:47 p.m.)

Nevada Gov. Jim Gibbons and legislative leaders announced a plan Wednesday for more cuts in state spending to cope with a projected revenue shortfall that now totals nearly $914 million and may get worse in coming months.

While the reductions delay many state building projects and some new programs, the plan avoids layoffs of state workers or cuts in operating budgets of government agencies, and preserves scheduled pay raises for state employees and teachers.

"These are not easy decisions to make," Gibbons said in outlining the plan, which relies heavily on delays in state construction jobs, nearly depletes a "rainy day" fund and cuts budgets for the state's prison and human services agencies.

The reductions, while painful, "are less painful than cutting money from the classrooms and from our already underfunded health care infrastructure," said Assembly Speaker Barbara Buckley, D-Las Vegas.

"We don't know what the future holds, whether we will be looking at something even more difficult two or three months from now," cautioned Senate Majority Leader Bill Raggio, R-Reno.

Senate Minority Leader Dina Titus, D-Las Vegas, said the cuts had to be made because state revenues aren't coming in as expected, "but when the revenues aren't coming in, the needs are going up."

The latest cuts are in addition to the 4.5 percent agency budget reductions the governor ordered in January. The agreement is based on state revenue projections through mid-2009 _ but those projections don't include the impact of a major state Supreme Court ruling on tax refunds that could push the $900 million shortfall closer to $1 billion.

At nearly $914 million, the projected shortfall amounts to 13 percent of the nearly $7 billion state budget approved last year for the current two-year budget cycle.

State Budget Director Andrew Clinger said the reductions include nearly $186 million in delayed capital improvement projects, plus another $45 million in delayed "one-shot" expenditures that had been approved by lawmakers.

The plan also takes about $267 million from a state "rainy day" fund _ leaving only $600,000 in that account. However, there are other fund sources to deal with any fiscal emergencies.

Among the cuts are $4.8 million for a new prison housing unit in southern Nevada, another $4.2 million for inmate housing, $2.1 million for a juvenile detention center in White Pine County, and $10 million to expand dental care benefits to seniors in a "Healthy Nevada" program.

The plan also delays $17.5 million that was going to be used to start "prefunding" a huge, long-term liability in health benefits for current and future state government workers. But Clinger said that reduction wasn't risky.