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July 30, 2014

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State slides deeper into fiscal hole

Gaming shortfall puts total tax collections $6.75 million short of June projection

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Face to Face: One Trick Pony?

Nevada's economy suffers another setback and Gov. Jim Gibbons tells state agencies to brace for more budget cuts. What will a recovery entail? Jon asks economic experts Guy Hobbs and Brian Gordon. Plus, Jon puts presumptive Democratic presidential nominee Barack Obama's new campaign ad through a Reality Check.

Monday brought more bad news for the state budget, this time in the form of gaming numbers.

Including gaming and all other sources of tax revenue, the state has collected about $6.75 million less to date than the Economic Forum projected it would when the five business leaders huddled in June.

Those projections formed the basis for the $275 million slashed from the state budget during June’s special session.

But despite some suggestions to the contrary, Gov. Jim Gibbons and his senior staff say another special legislative session to address the shortfall is unlikely, given their already gloomy projections and the cuts made in June.

“Right now, we have the cash flow necessary to avoid a special session,” Gibbons said in an interview Monday after the state released gaming revenue figures for June.

Those numbers showed that during the month the state took in $52.1 million in gaming tax, missing by 4.4 percent the forecast of $54.5 million.

In an interview with a Reno TV station last week, Gibbons appeared less optimistic about the state’s ability to stay afloat until the Legislature’s regular session begins in February.

“We may have another special session if the numbers don’t prove to be healthy,” the governor said. “The problem is not taxes. The problem is spending ... We have a spending problem.”

On Monday, the governor said the difference between the projections and the actual numbers was not dramatic.

Still, he hedged: “There are no guarantees on anything.”

Andrew Clinger, the governor’s budget director, said tax collection figures due later this month will be an important indicator of how accurate the economic projections will be for the remainder of the year.

“We’re not at a point where a special session is necessary,” he said. “A lot hinges on the next reports we get,” in late August.

That’s when another month of sales tax numbers comes in, as well as quarterly receipts from other taxes.

Clinger said he expects gaming tax revenue to pick up later this year, when two Las Vegas Valley casinos, Aliante Station and Wynn’s Encore, open their doors.

The Nevada Legislature meets every other year, with the next session set to begin in February. The governor can call a special session at any time, as he did in June, to deal with plummeting state revenue.

While governors in the past had ordered departments to cut budgets without getting legislative approval, lawmakers were required to sign off on some of the moves — such as draining the state’s rainy day fund — needed to make sure there was enough cash on hand for the state to pay its bills.

The state has already cut $1.2 billion from this current budget cycle, which runs from July 2007 to June 2009. Meanwhile, the governor is preparing the next biennium’s budget, and has asked departments to come up with another $1 billion in cuts. Those cuts would be the steepest since at least the Great Depression.

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