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October 25, 2014

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BUDGET SPECIAL SESSION:

What gets cut?

When legislators meet to tackle shortfall, everything, apparently, will be on the table

Gov. Jim Gibbons’ call for a special legislative session is unprecedented in the history of the state, according to Nevada historians.

Special sessions have been held to address the state’s economy and tax revenues, but those were tied directly to a regularly scheduled legislative session. Off-year special sessions have been called to address issues such as medical malpractice costs in the state in 2002.

This is the first time, historians say, that an off-year special session has been called to deal with a statewide budget shortfall.

So here’s a primer on the proposals that could be discussed when the 63 members of Nevada’s citizen Legislature trek to Carson City to find between $60 million and $100 million that the state is expected to be short this year.

There seems to be no consensus among Republicans and Democrats. And Democrats, for their part, are irate.

Assemblyman Morse Arberry, D-Las Vegas, chairman of the Ways and Means Committee, which decides money issues, said he had to find out about the special session from the media.

“I know he (Gibbons) has personal problems but they should not have anything to do with running the state,” Arberry said.

Republicans, speaking on condition of anonymity, acknowledged that it wouldn’t hurt to have Gibbons look gubernatorial. But some said it was an uncommonly savvy move to force Democrats to address the state’s dire fiscal situation.

Gibbons will set the agenda for the special session next week when he signs the executive order. So precisely what will be on the table won’t be known until then.

But the governor said Thursday: “Everything is on the table.”

The issue the Legislature will address is not Nevada’s long-term fiscal plight or even the problems forecast for the next budget cycle. Instead, according to the governor’s spokesman, the session will deal with the immediate shortfall for the 12 months beginning July 1.

Below is a rundown of what might be considered in the session.

Delay cost-of-living raises

The idea: Gibbons’ allies are advocating this plan, which would delay until July 2009 a promised 4 percent cost-of-living increase for the 14,000 state and university employees and teachers scheduled to take effect next month.

Pros: It could save Nevada an estimated $125 million to $130 million annually.

Cons: There’s strong public sentiment that teachers — the largest number of employees set to get the raises — are underpaid. There also are legal questions about whether school boards can take back the 4 percent raisesthey agreed to with local teachers unions. If school districts are forced to provide the pay raises and find an estimated $90 million in savings elsewhere, layoffs in education are likely.

Politics: Democrats, especially in the Assembly, oppose the move. The state’s public employees union is preparing for war. But Senate Majority Leader Bill Raggio, R-Reno, came out Friday in favor of delaying the raises. The Gibbons administration and Republicans could argue that the alternative to the pay-raise delay — budget cuts and layoffs — would be too severe.

Tobacco

The idea: Take $1.2 billion in tobacco settlement money the state is set to get over the next 17 years and turn it into a one-time payment of $600 million to $700 million.

Pros: Quick infusion of cash to get us through tough economic times.

Cons: The one-time payment would be used to pay for ongoing expenses and operations. Also, that money currently funds children’s health programs, senior prescription drug programs and the Millennium Scholarship.

Politics: Assembly Democrats have said the plan, long pushed by Lt. Gov. Brian Krolicki, won’t pass the lower house. Plus, Treasurer Kate Marshall says that Krolicki is refusing to share his calculations with her office, which administers the tobacco settlement money. Gibbons himself expressed concern about using one-time money to pay for continuing expenses.

2 percent cuts

The idea: For each 1 percent the state cuts across the board, it would save about $32 million for the upcoming fiscal year.

Pros: This is a relatively simple, if painful, answer. Make department heads do most of the hard work of finding where to cut.

Cons: The governor in January ordered 4.5 percent cuts across the board and after that, department heads said there were no more cuts to make without affecting programs and likely laying off workers.

Politics: This is the alternative Democrats seemed to be pushing. The governor would order departments to make the 2 percent cuts, the Interim Finance Committee would pass them and there would have been no need for a special session. If this solution is selected, Gibbons will be portrayed as having wasted time and money (the early cost estimate for a special session is $100,000 for the first day and $50,000 for each subsequent day).

Reduced workweek

The idea: Reduce state employees’ workweek to four days or nine days every two weeks.

Pros: Some savings from not having to open the doors to state offices as often. The numbers are being crunched now.

Cons: Will the savings be significant? Plus, have you ever tried to get someone at Henderson or North Las Vegas city halls on a Friday?

Politics: Unknown.

Room tax increase

The idea: The teachers union, Speaker Barbara Buckley and three major gaming companies have reached a deal to raise the room tax in Clark and Washoe counties by 3 percentage points to a maximum of 13 percent. Proponents are trying to get an advisory question on the November ballot, with the Legislature taking action in 2009.

Pros: $150 million a year in new revenue, mostly paid by tourists.

Cons: Could it affect tourism in a soggy economy?

Politics: Not going to happen. Despite calls from Democrats such as Sen. Bob Coffin to implement the room tax increase immediately, Gibbons has said he wants to see a vote of the people before he signs off on it. Same goes for those, like Raggio, in the midst of a primary challenge from the right.

Broad business tax

The idea: No way, no how, from the governor to Republican and Democratic

legislative leadership. No one, right now, wants to raise taxes.

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