Gibbons may be softening on anti-tax stance

By Cy Ryan (contact)

Friday, Nov. 7, 2008 | 5:37 p.m.

CARSON CITY – Gov. Jim Gibbons’ anti-tax stance may be softening as the financial crisis facing state government worsens.

“We are looking at all options,” said Gibbons as he emerged from a two hour meeting with some legislators. “Nothing is off the table,” indicating that taxes may be needed in addition to major cuts in government agencies.

And the picture gets worse. Earlier this week, state Budget Director Andrew Clinger said agencies would have to reduce their budgets $250 million to get through this fiscal year. That figure has risen to $300 million.

The shortfall for the next two fiscal years will be $1.5 billion, not the $1 billion estimated earlier.

Assemblywoman Sheila Leslie, D-Reno, who subbed for Assembly Speaker Barbara Buckley whose son was receiving medical treatment, said the Democratic and Republican lawmakers at the meeting in Reno “pledged to work together.”

But she did not see the need for an immediate special session of the Legislature. She described the situation as “dire” but doesn’t want to see reductions that will mean such things as shutting rural hospitals or less mental health or other human services programs.

Senate Majority Leader Steven Horsford, D-Las Vegas and Assemblyman Morse Arberry, D-Las Vegas, who is chairman of the Assembly Ways and Means committee, participated in the meeting by telephone.

Assembly Minority Leader Heidi Gansert, R-Reno, said she did not feel a special session was needed now. And she said she didn’t want to raise taxes.

But Gibbons, when asked, said the state will have to look at its revenues “to see if that is an option.” He said, “I don’t want to raise taxes. Everybody knows that’s a terrible, terrible thing to do in times of a recession. But we have to look the impact of any kind of proposal like that.”

The state has to look at alternatives when the state does not have revenue, he told reporters.

He said the Friday session was to talk about the shortfall and no solutions were adopted. The group will meet Nov. 17 to further discuss first how to deal with the $300 million shortfall this year and where the budgets might be cut. At that time agency directors will tell lawmakers what the cuts will mean to their agencies.

Buckley has also called a meeting of the Senate Finance Committee and the Assembly Ways and Means Committee to examine possible solutions on Dec. 8-9.

Leslie, when informed of the governor’s comments on taxes, said, “I’m glad that he’s looking at both sides,” meaning reductions and new revenues.

Asked specifically if he would favor a tax increase, Gibbons said, “You know the public has already voted for a tax increase and I have always said if the public supports a tax increase, I will not be opposed to it.”

Voters approved a 3 percent increase in the tax on hotel and motel rooms to bring in an estimated $125 million a year. In the first year, the money would go to general government but after that it would be earmarked for the public schools. The vote was advisory and the Legislature would have to approve the proposed tax.

The measure passed in Clark and Washoe counties but was defeated in Lander County. It was only on the ballot in those three counties.

The 2007 Legislature appropriated $7.3 billion in general funds to cover government operations in the 2008 and 2009 fiscal years. Gibbons suggested the next biennial budget may be only $5.7 billion because of the stagnant economy.

Gibbons noted state agencies have already sliced their budgets first by 4.5 percent and then by an additional 3.2 percent this fiscal year.

Asked if he would sign any tax bill if the public did not approve it, Gibbons said, “I said that I would not approve it unless there are agencies or those people that are users or voted on by vote of the people.

“Secondly every tax or fee increase in the state of Nevada by the Legislature has to be approved by a two-thirds majority vote,” he said. Democrats have a two-thirds majority in the Assembly, but not the Senate.

Layoffs of state workers and salary reductions are a possibility, he said. Until now there have not been layoffs.

The Economic Forum voted 4-1 that the major general fund revenues for the state would be only $2 billion this year. That’s more than $400,000 less than the budget experts in state government predicted. The Forum meets again Dec. 1 to set the tax revenue estimates for 2010 and 2011.

The governor must build his budget on those figures.

Cy Ryan may be reached at (775) 687 5032 or cy@lasvegassun.com.