STATE BUDGET:

Cuts aren’t the way out of the hole, Guinn says

Ex-governor says long-term financial planning must become priority for Nevada

Trent Ogle

“If things turn around and just go back to normal, we are still terribly behind,” former Gov. Kenny Guinn says of upcoming state budget talks.

By David McGrath Schwartz (contact)

Thursday, Aug. 21, 2008 | 2 a.m.

Special Session 2008

Division of Budget and Planning

Carson City — State political leaders have spent the past year searching for ways to cut the budget. Because of the continuing economic downturn, they will likely be preoccupied with more of the same when the 2009 Legislature convenes in February.

Former Republican Gov. Kenny Guinn wonders who is looking to the future.

“What have we done besides talk about cuts for the last year?” Guinn said in a recent interview with the Sun. “You have to talk about them, but parallel to it, you have to have a program running over here with people looking, saying, ‘How long can we afford to do it this way?’ ”

There has been a lack of leadership, he said, on a long-term plan to both address the budget crisis and eventually rebuild the services that have been cut.

“The next biennium is going to be extremely difficult,” Guinn said. “What we need is a long-term strategy.”

Gov. Jim Gibbons formed the Spending and Government Efficiency (SAGE) Commission to examine ways to increase the efficiency of state government. That’s a start, Guinn said, but anyone looking at Nevada’s future should consider more than cuts.

Gibbons and legislators have hacked $1.2 billion from the current budget. They likely will need to cut more than $1 billion from the next budget, which they will debate during the upcoming legislative session.

“What’s going to be left for the SAGE Commission to tell us needs to be cut?” Guinn said.

“That might have been a good thing when someone decided we needed to do it. But look at it today, you would change focus, say, ‘Wait a minute, let’s use these high-powered people, use the resources they have collected, let’s really look at developing a strategy, a plan, to help us as we move forward with these issues of revenue versus expenditures.’

“We’re just on one side, of just cut. That’s not a plan. We’re being forced to cut, so that’s not a plan,” he said.

Guinn served eight years as governor before term limits ended his time as the state’s chief executive in 2006. He had been superintendent of the Clark County School District, head of a Las Vegas Valley savings and loan, interim president of UNLV and chief executive officer of Southwest Gas Corp.

Guinn insisted his remarks should not be interpreted as criticisms of Gibbons, with whom he has publicly sparred in the past.

The falling out between the two Republicans dates to a 2003 speech Gibbons, then a member of Congress, gave to the Nevada Legislature criticizing the proposed tax increase that Guinn supported.

Citing the 2003 budget standoff — it ended with the tax increase passing over the objections of some Republican lawmakers — Guinn said whoever has a plan for the state’s future will also have the high ground in the debate. He said he repeatedly asked for suggestions from opponents of his plan on what should be cut instead of passing the tax increase. He said he never received any.

“If you have a plan, the pressure is on them,” he said.

“If you’re a Republican and you have a plan, Democrats have a problem. If you’re a Democrat and have a plan, Republicans have a problem,” he said.

Despite the recent deep budget cuts, Gibbons has stood by his pledge not to raise taxes and continued to insist the state’s problem is excess spending. (“The problem is not taxes. The problem is spending ... We have a spending problem”).

The governor has asked department heads to come up with 14 percent cuts as he prepares his budget, which lawmakers will debate when the 2009 Legislature convenes in February. Cuts of that magnitude would be the deepest since the Great Depression.

Gibbons’ spokesman, Ben Kieckhefer, said the governor will also propose a spending cap that would help Nevada weather economic ups and downs. The details are still being worked out, but the cap would prevent the state from spending excess revenue during good times and set aside that money to use during downturns.

“The governor wants to have a steady and predictable amount of growth,” Kieckhefer said. “We have a system now where the state has allocated all the money it thinks it has every year.”

Democrats are scheduling a series of town hall meetings across the state and are expected to unveil their plan in September.

Legislative veterans expect the 2009 session will be the most contentious in recent memory.

Further budget cuts seem inevitable during the session, Guinn said, and with the economy sliding, now is not the time to raise taxes. But the state needs to look beyond its immediate problems, he said.

“If things turn around and just go back to normal, we are still terribly behind,” Guinn said.

“I think what reasonable people are starting to say is, ‘If this goes on for two years, and then another two years, when do we do something different from cutting?’ ”

This economy would severely challenge anyone in the Governor’s Mansion. Guinn said the budget crisis has gone on longer and been more pronounced than the sudden slump he faced as governor, after the 9/11 attacks.

Still, Guinn said, he sees a lack of state leadership in developing a plan for the future.

“The reason we have a CEO of a company, the president of the United States, the reason we have a governor, is, we put them in a leadership role,” he said. “Some people are better at it than others. But leadership is tantamount to the position.”

Sun Capital Bureau reporter Cy Ryan contributed to this report.

Discussion: 17 comments so far…

By odog

8/21/08 at 5:14 a.m.

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Money is not the answer!

This is like the pot calling the kettle black. Guinn is the reason for the largest tax increase in Nevada history. One thing is for sure, no more school personnel turned politicians need to be elected in this country. They think throwing money at education is the answer.

Parental involvement and accountability, student discipline, teacher discipline for social promotion, removing unnecessary subjects from the curriculum, setting a teaching standard for all required subjects, removing ALL illegal immigrates and ALL students that have disciplinary problems, will best serve the students that want to learn, provide the same quality of teaching for every course and cut the cost of education. Stop pampering the students and parents. There will be no need for remedial classes at Universities. The administration and teaching staff could be greatly reduced.

Chinese schools have up to 100 students in the classrooms, one teacher, and the teachers move to the different classrooms, which saves time.

If parents want their children to have elective subjects, pay for them.

This might sound harsh, but it is time for all schools in this country to get their act together and educate our children, not baby sit or pamper them.
By neiman1

8/21/08 at 7:48 a.m.

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There is a reason he is the ex governor. Taxpayers in Nevada don't want new spending solutions, they want less of it. We are never going to close the gap until energy costs go down. People can't afford the increased cost of getting here, especially when they are broke from rising energy prices at home and the increased costs now of everything energy makes and transports. Worse times are coming and we need to change our policy on drilling and nuclear NOW.

Contact Harry Reid.

email link
http://reid.senate.gov/contact/index.cfm...

Las Vegas
Lloyd D. George Building
333 Las Vegas Boulevard South, Suite 8016
Las Vegas, NV 89101
Phone: 702-388-5020 / Fax: 702-388-5030
By KDR81

8/21/08 at 8:15 a.m.

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If cutting the budget ends up balancing the budget then, yes, we do get out of the hole.

Raising taxes gets us out of the hole temporarily, but knowing our legislature it will take all that money, spend it, and dive head first right back into the hole.

http://npri.org/blog/pictures-are-worth-...
By gmag39

8/21/08 at 8:50 a.m.

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Good for you, Mr. Guinn. We needed someone to say it. Jim Gibbons doesn't have a clue how to govern. If we just needed to make cuts, we could have elected an accountant. What we need is a plan. Nevada needs some forward thinkers in state government.
By KDR81

8/21/08 at 1 p.m.

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I'm pretty sure, given a recent tax hike, that not raising taxes is a forward thinking plan.
By MichaelGreen

8/21/08 at 1:50 p.m.

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Neiman 1, the reason Kenny Guinn is ex-governor, as the article said, is that he was term-limited out. Whether he would have run again and won, no one can know. But I find it fascinating that you posted that misinformation when an informed Nevadan should know better, and you are well-informed enough to have Harry Reid's contact information right at hand. One wonders why you were here.

The key point that Guinn--who I didn't think that much of as governor, but he's certainly looking better every day--made is that no one else had an alternative. Well, he's wrong. Bob Beers and his colleagues proposed a tax increase of about $700 million. Had it passed, it would have been the largest tax hike in Nevada's history--and it involved the Great Genius of Nevada's Budget and Taxes. But ol' Bob doesn't like to mention that.
By avatar

8/21/08 at 2:52 p.m.

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Utah, Georgia and Delaware are the best financial stewards, according to the USA TODAY analysis of the states' financial performance. The key to their success: restraint. During the economic boom of the late 1990s, these states limited both spending growth and tax cuts. After the economy weakened in early 2001, they acted swiftly and decisively to keep their finances sound.

From USA today. Sorry for the copy and paste, but the key word is restraint. When times are good don't spend it all. Nevada, a state dependent on sales and gaming taxes, should put the first 2% of all taxes collected into a "piggy bank". If it grows to 4 billion dollars- so what!! Invest the money and use it for state projects. If and when Nevada has a horrible downturn, use the billions to bail us out and start over.

These up and down cycles will never end. Plan for them. Gibbons is an idiot in my opinion.
By DavidMorgan

8/21/08 at 3:08 p.m.

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How can you put "excess" funds levels commensurate with being a state of the union as it is. This state should rename itself Nevada, the taxaphobic state.
By DavidMorgan

8/21/08 at 3:12 p.m.

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Nevada doesn't spend enough on services as it is. What we call rainy day money should have been spent on providing REAL services to the sick, the handicapped, the mentally ill and those stuck in grid-lock traffic. Nevada has been under the impression that taxes and services are optional and can be reduced to 10 dollars per person every other year. Yet we've got half the population walking around with thousands of dollars of tatoos on their bodies and their $65,000 motor homes parked on the street in front of their double wides.
By Launce

8/21/08 at 4 p.m.

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Kenny Guinn served two terms and has been our most popular Republican governor of the modern era, and probably second only to the late, great Mike O'Callahan among governors overall.
Like O'Callahan, Guinn had the fortitude and courage to recognize that Nevada had to take steps to address chronic underfunding of essential services, education and other pressing needs.
We need more public servants like him - in the Governor's Mansion and the Legislature.
By Future2012

8/21/08 at 4:14 p.m.

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Kenny Guinn was a Republican governor in name only. Kenny never turned down a tax increase or a spending initative.

Guinn jumped ship with the labor supported pension funds billions of dollars underfunded.
By truthfromreason

8/21/08 at 4:23 p.m.

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There certainly are quite a few opinions being posted that have no basis in fact. Fact - According to the conservative Tax Foundation, Nevada ranked 43rd in the country on government spending per capita in 2006 - before our current and looming budget cuts. If people think services and programs in this state are underfunded now, wait until the additional 14 percent takes place. Example - There is currently a six month waiting list to see a mental health professional in rural Nevada, now THAT is insane.

After these pending cuts, it would not surprise me if Nevada ends up 50th in spending per capita. This should shut up any of you who feel like we have a "spending" problem. There is no doubt that our growing state needs more revenue, or else we will just continue to fall behind. Rolling up your sleeves and posting some ill-informed conservative diatribe about being "fiscally responsible" accomplishes nothing. How about the responsibility we have to form a government that works for the citizens of this state. It is OUR government after all. Please get your facts straight before posting comments lest you just end up looking misinformed.
By odog

8/21/08 at 7:19 p.m.

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truthfromreason

We are 4th highest in the country for residents paying taxes in the US.

The state in which RESIDENTS pay the most in combined state, local and federal taxes, PER CAPITA, is Connecticut (38.3%), followed by New York (37.1%), New Jersey (35.6%) and NEVADA (35.2%). Oklahoma residents pay the least (27.8%), followed by those in Alabama (28.0%) and Alaska (28.1%).

Read the article

http://articles.moneycentral.msn.com/Tax...
By odog

8/21/08 at 10:10 p.m.

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It sound like some of these people in this discussion might be in bed with Guinn
By pattina23581

8/22/08 at midnight

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Hey, while we are increasing class size to 100 (like they do in China), maybe we can put some tanks at our schools. So, when the kids get out of line we can just run them over!
By truthfromreason

8/22/08 at 9:25 a.m.

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Nice try, Odog.

Your random article that you pulled up after doing a Google search factored in federal and local taxes as well. We are talking about STATE taxes. Keep doing random searches for state taxes and you will find results that further confirm what I posted. We do have a tax problem in this state - there are not enough taxes to sustain a healthy, educated and thriving community.

Good luck with your further efforts to justify your argument.
By pattina23581

8/23/08 at 11:58 a.m.

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Truthfromreason is right. The reason Nevadans total burden in fed, state, and local taxes is high is that we have a higher per capita income here. This makes many fall in the higher brackets for fed taxes, which raises the overall burden. State and local taxes are some of the lowest in the nation, and tourists pay much of those. Leaving state residents to pay even less. Federal taxes collected are generally not used to fund public education, and this is why there is such a crisis here in Nevada.