The Governor:

Gibbons’ crisis of ideology on budget

Will he made good on tax pledges or call an audible?

By David McGrath Schwartz (contact)

Saturday, Dec. 13, 2008 | 2 a.m.

Cathleen Allison / nevada Appeal

Gov. Jim Gibbons signs special-session bills Tuesday to plug the state’s budget shortfall.

Archive of Sun politics stories

Gibbons shares his wisdom (12-12-2008)
Cuts slide deeply into classrooms (12-11-2008)
Will name game avoid blame? (12-10-2008)
Raiding step pay raises could turn costly(12-10-2008)

Carson City — Gov. Jim Gibbons is at a crossroads.

In a little over a month, the governor by law must reveal his budget for the next two years.

In the starkest terms, the first-term Republican governor has two options.

The first is to cut his way to a balanced budget, a whopping 34 percent. It’s a path that would shore up his conservative base and fulfill his promise not to raise taxes.

Yet some who understand state government well, including Sen. Bill Raggio, say the budget could not sustain cuts that large.

The state must abide by federal requirements to provide a minimum social safety net. And even limited-government conservatives, which Gibbons says he is, believe the state must educate children, lock up criminals and patrol highways.

That leads to the other path the governor could take: Present a budget that includes some tax and fee increases along with the inevitable cuts, money from local governments and other accounting gimmicks.

He would be pilloried by the right for breaking his campaign pledge, but he would gain the respect of the political establishment and still have a voice as the budget makes its way through the Legislature.

Those close to Gibbons say they don’t know what kind of budget the governor will propose.

And there are indications the governor has been debating internally.

Soon after November’s election, Gibbons told reporters “nothing is off the table” as he prepares budgets for fiscal years 2010 and 2011.

Asked about taxes, he said: “We are going to have to look at some of our revenue and see if that is an option. I don’t want to raise taxes, as everybody knows. It would be a terrible thing in a time of recession.”

He might be shifting, waking up to the reality of the budget, some thought at the time.

Then, a few day later, Gibbons seemed to again take taxes off the table, noting the Legislature could always override his veto of a tax hike.

For his most cynical critics, it confirmed their belief that Gibbons would submit an ideologically sound but morally bankrupt budget. (“Where does the buck stop?” an editorial in the Nevada Appeal asked.) The governor would know the cuts were unacceptable, but also that legislators would never pass them.

Such a move would allow him to stand by his no-new-tax pledge, yet not have the weight of 34 percent cuts — thousands of layoffs, prisoners released, programs cut for the elderly, poor and mentally disabled — on his conscience.

In the weeks that have followed, Gibbons has seemed to maintain his no-new-tax stand.

After Monday’s special session ended, he bluntly said his budget for 2010 and 2011 would not raise taxes. He would not raise fees unless the industries that paid them agreed to it.

Agencies could be consolidated, he added, though he did not seem to acknowledge that services to citizens would be affected.

“The government you see today is not the government you’ll see tomorrow,” he said. “It will be smaller, more effective, more efficient.”

•••

Governors’ budgets have historically been the basis for the spending that is eventually approved by the Legislature.

On Jan. 15, Gibbons will give his State of the State and outline and defend whatever plans he submits to lawmakers. A few days later, on Jan. 19, Gibbons is required to unveil a budget.

Currently, according to budget director Andrew Clinger, the cuts needed to balance the upcoming budget would have to total 34 percent. The state’s Economic Forum this month set the state’s spending cap at $5.7 billion, or $1.1 billion less than was approved by the Legislature two years ago.

On top of that, expenses thought to be untouchable, such as higher rents, growing school enrollments and federally mandated inflation increases, are expected to rise by about $1 billion, according to Clinger.

Such a budget is impossible, say veterans of the process.

Hugh Anderson, government affairs chairman of Greater Las Vegas Chamber of Commerce, sent a letter to members saying the state could require more “revenue.”

Asked in an interview what he meant, Anderson said: “A tax by any other name is still a tax. When you remove any profitability from a business, whether it’s a fee, a tax, a permit, it’s a tax burden on that business.”

Longer-term fixes to public employee retirement and pension programs are required, he said, but the reality is that core government services have already been slashed. “Certain ... cuts are counterproductive to the state in the long term as well as the short term,” Anderson said.

Anderson said he was “intrigued” to see Gibbons’ budget.

“When you get a politician or elected official who’s steadfast on what he ran on, it’s rather refreshing. That being said, circumstances have changed,” he said.

Raggio said he hasn’t talked to the governor about his budget, and would not speculate on what it would look like.

“He’s going to have to get his advice from people he’s working with, his budget director, department heads,” Raggio said. “I don’t think you can cut base budgets 34 percent and still provide services necessary, particularly in public safety, education and health and human services.”

Assemblywoman Sheila Leslie, D-Reno, said a Gibbons budget that does not raise revenue and comes in with drastic cuts “has the potential to make him irrelevant.”

There is, of course, some gray area for Gibbons on additional revenue. Voters in Washoe and Clark counties approved an advisory question in November calling for a 13 increase in the room tax. Gibbons could also take money from local governments or use financial gimmickry like taking out another loan to cover operating expenses.

Lobbyists and most political consultants — who would speak only anonymously for fear of retribution — said they believe the governor will submit a budget that maintains his no-new-tax pledge, and which the Legislature will largely ignore.

One senior adviser to Gibbons disagreed. He said the governor knows the state still has to function.

“The governor will submit a responsible budget he believes works for the state of Nevada,” said the adviser.

The adviser also predicted the governor would work with both parties to prepare the budget.

So far, he has not.

In the end, it might not matter what Gibbons proposes. The governor has alienated many Republicans. With low approval ratings and a widespread belief he is in his last term, he’s almost serving as a lame duck.

Democrats have a veto-proof majority in the Assembly. They need only two Republicans for a two-thirds majority in the Senate.

The governor’s budget might matter only in how the history books judge him.

Discussion: 6 comments so far…

By jfnance32

12/13/08 at 8:29 a.m.

Suggest removal

For the last 3 years from the SUN:

"We hate Gibbons. We really really hate Gibbons. Gibbons is the worst leader since the since the beginning of the earth. By the way if you did not know.....WE HATE GIBBONS."

Today, the Sun is saying. We have been withholding judgement on Gibbons for years. We will totally judge him by this budget.

This is BS. If the Gov. even came up with large tax increases, then the next day it would be from the SUN: "We hate Gibbons. We really really hate Gibbons. Gibbons is the worst leader since the since the beginning of the earth. By the way if you did not know.....WE HATE GIBBONS."

Large tax increases on struggling businesses will cause more layoffs in private sector and would extend the Nevada recession and cause less government revenue in the long run.

Any politican that proposes large tax increases on struggling businesses should be fired in their election cycle.
By skisailmtb40

12/13/08 at 11:56 a.m.

Suggest removal

Why isnt this article in the editorial section?
By tbvegas

12/13/08 at 1:48 p.m.

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I have been waiting my whole working life for this day when government cant bleed us anymore. I don't care if they tax or cut their way out of this. Net - Net it's the same! Finally we will see THEM pay! lol
By revronvegas

12/14/08 at 9:12 p.m.

Suggest removal

In all my sixty years of life I've not seen any business go out of business because of taxes. I've not seen families go bankrupt because of taxes. I don't believe that happens in reality.

Insurance companies (God bless 'em!) have long understood that the pooling of the deposits of many can be an effective way to solve problems of the few. And so the pooling of our deposits to governments can be an effective way to solve problems of the few ... ie., school children, mentally ill, health care deprived, etc.

We have serious problems in the state of Nevada. We can begin to solve them if we pool our resources. They're our problems. We should solve them with our resources not with tourists' resources. It's time we pulled up our pants and acted like grown-ups. Pay taxes...all of us. If we don't the quality of life will become increasingly less attractive for all of us. Pay taxes. It works.
By LasVegan

12/15/08 at 12:06 p.m.

Suggest removal

I am dumbfounded by revronvegas' calling "problems of the few" as "school children, mentally ill, health care deprived, etc." Those are the weak that need to be protected and cultivated in a society. We don't have children but gladly pay our taxes to give other children education, because of social contract.

Then he turned around and called problems in Nevada "our problems" that we all need to solve. So are they problems or the few, or are they "our problems"? You can't have it both ways.

No logic. No argument. Just repeated "Pay taxes", "pay taxes". If that's all you can come up with, revronvegas, then you are wasting my time who even read through every word you said to see if you have a good argument. None. Whatsoever. Other than a very weak "insurance companies know it all."

But revronvegas, remember I can CHOOSE to buy insurance or not, you want to legistlate to force me to pay for everyone else's problem, mainly, your problem. You are one of those who thought you could pay a bit of insurance premium, and reap a handsome reward. You have tax benefit to enjoy while I have tax penalty to pay, because those weren't my problems. If everyone is a taker, there will be no tax benefit.

For those who want OPM - other people's money, so badly, it's because they figure they don't have much to lose.
By morgen

12/27/08 at 2:16 p.m.

Suggest removal

"I can CHOOSE to buy insurance"
Not true, LasVegan, not true. Do you CHOOSE to buy car insurance, and for other types of insurance, do you have a choice, really??? this is pure "free"-market hypocrisy

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