The Associated Press

Fri, May 9, 2008 (8:07 p.m.)

A package of budget cuts was submitted Friday to Nevada lawmakers by Gov. Jim Gibbons, who's trying to cope with a projected revenue shortfall that could approach $1 billion by mid-2009 and lead to staff cuts and layoffs.

The budget cuts were forwarded to legislators who can either let them take effect or approve them at a meeting of their Interim Finance Committee. That panel is scheduled to meet June 26.

The decision to forward the cuts to lawmakers was made following advice received from the attorney general's office, based on an analysis of Nevada law. The attorney general noted that in past years the legislative approvals hadn't been sought.

"The attorney general's office advised me that this is probably how it should have been done in the past, but lawmakers never objected so it never became an issue," Gibbons stated.

Assemblywoman Sheila Leslie, D-Reno, part of the Assembly leadership team, said the attorney general's opinion points out that "we do not live in a monarchy, and the legislative branch is equal to the executive branch. We need to be working together."

Gibbons, in announcing budget cuts of 4.5 percent for most state agencies and education in January, effectively reduced spending in dozens of different budget accounts.

The cuts were announced because tax revenues have come in well below the estimates used to build the current two-year budget. Gibbons' latest estimate, updated to reflect a report Friday on casino revenues and taxes, puts the shortfall at just over $960 million.

State Budget Director Andrew Clinger said that if the revenue trends continue the state could be faced with a two-year budget of about $6.9 billion starting in July 2009. That would be slightly higher _ by only 1 or 2 percent _ than the current two-year budget.

That would contrast with state spending that normally increases 15 to 20 percent from one budget cycle to another to keep up with various demands for services in a rapidly growing state. In this case, the demands would still grow _ but the revenue wouldn't be there to pay for the expansion of services required by those demands.

Clinger also said additional cuts may be needed in this cycle beyond the 4.5 percent reductions and other savings already imposed _ and that could mean staff cuts and layoffs. He said any decisions will depend on quarterly reports on business, real estate and insurance premium taxes, due at the end of the month.

"Layoffs would be a decision ultimately up to the governor and lawmakers, and no decision has been made," Gibbons press secretary Ben Keickhefer said Friday. "We are waiting additional revenue information that we'll use to build our budgets for the next biennium."