The state’s budget crisis

By Jon Ralston (contact)

Friday, Nov. 14, 2008 | 2:01 a.m.

Emptying out the notebook at the end of the week after the Republican Party died in America and conservatives, here and elsewhere, are wringing their hands to figure out what went wrong, whom to blame and what to do as the economy, here and elsewhere, slowly crumbles:

• A special session might help? If, as some believe is inevitable, Gov. Jim Gibbons calls a special session, don’t forget there will be two Democratic houses of the Legislature. If we didn’t know it before, that Supreme Court decision on term limits reaffirmed that legislators take office the day after they are elected. So if he wanted to, Gov. No New Taxes (most of the time) might want to flex his veto muscles sooner rather than later — or sooner and later.

For the first time in a decade and a half, Bill Raggio would be watching someone else — i.e., Steven Horsford — set the agenda in the upper house. And Horsford will have to decide, along with Speaker Barbara Buckley, whether to simply rubber-stamp the governor’s wishes (as the Democrats did last time) or come up with an actual plan rather than rhetoric.

This would be a dress rehearsal of the personality dynamics for next year’s regular session. Knowing these folks, what happens in ’08 will not stay in ’08, and will have an effect on the success or failure of the regular session (and likely specials) in ’09.

The only policy reason to call a special session is if the budget mavens decide the state doesn’t have the cash to make it until the regular session begins in February. And if that’s so, this won’t just be a preview of Session ’09; it’ll be the overture to a very depressing fiscal concert next year.

Anyone in either party, either house want to be the maestro?

• How big can the cuts get? Remember all the controversy last time about the projections as lawmakers derided the administration’s numbers as too dire? Turned out budget boss Andrew Clinger was right to be so pessimistic and apparently he is telling agency heads to prepare for some drastic cuts — and soon. It is not simple to make a $300 million hole disappear for the current fiscal year.

Many on both sides are against the idea of salary reductions, despite the governor’s much-hyped promise to cut his own as a start. (What? We are still paying him?)

There are several issues, sources say, not the least of which is two-thirds of the employees are schoolteachers who have contracts. That raises a whole host of issues, political (they don’t make much anyhow) and legal (you can’t make a law that interferes with a contract).

• How do you cut a third of the budget? Answer: You can’t. And with that 34 percent or so the worst-case number (they hope) looming now over the next biennium, lawmakers and Gibbons are wondering what to do.

Even the governor can’t possibly believe bringing out his across-the-board broadsword will work this time. Surgical cuts must be used, and two questions will determine what occurs:

1. Can lawmakers get two-thirds for any tax increases, too, to mix with the cuts?

2. Can the Gang of 63 and Gibbons get to some kind of consensus so this doesn’t become an utter bloodbath?

The answer to both questions today most certainly is no. But in the year of “yes we can,” perhaps even the impossible is possible in Carson City.

• Maybe a state bailout is the answer? Conservative David Frum, who wrote a book arguing the right can rise again, was writing on National Review Online this week and advocating against the auto bailout, when he pivoted:

“Their (automakers) troubles are felt up and down the manufacturing supply chain. But of course that is true for every industry.

“Last week, the stock of Las Vegas Sands Corp. collapsed. Bankruptcy seems a real possibility. Indeed, the whole casino gambling industry in Nevada is facing the worst crisis in at least a generation, maybe ever. Casino gambling directly employs more people than the domestic automobile industry. Add in the supply chain for both industries, and casinos still employ almost half as many people as the automobile sector.”

“So what about a bailout for the casino industry? Ridiculous! Right? But why right?

“Gambling is a vice, it’s true. But automobiles emit greenhouse gases.

“The answer is not to bail out both. It is to bail out neither.”

Shhhh. Don’t let Gibbons, a wholly owned subsidiary of Las Vegas Sands Inc. see that piece. It might give him ideas.