Gibbons: Special legislative session might be needed

By Cy Ryan (contact)

Friday, Oct. 10, 2008 | 5:31 p.m.

CARSON CITY – Tough economic times are ahead for Nevada and they might force more cuts to the state budget requiring a special session of the Legislature, Gov. Jim Gibbons said Friday.

At a press conference, said with the unemployment rate pushing upward the nation and the state “are in an economic recession and we have to deal with reality.”

The 7.1 percent unemployment rate is expected to rise to 7.5 percent or 7.6 percent by January, he said. And an economic turnaround is 18 months away. The last time Nevada’s jobless rate was higher was in January 1983, when it rose above 10 percent.

Problems may arise paying the jobless claims to the growing number of unemployed workers, Gibbons said.

Gibbons earlier ordered state agencies to submit budgets for the next biennium that are 14 percent lower than the present spending level. It may be necessary, he said to reduce that number further. But he said it will have to get the tax collection projections to be made by the Economic Forum.

The governor must live by those forecasts. And the final estimates of tax collections for the next two years won’t be made until the end of November.

A special session will depend on the cash flow of the state. “It will not be ruled out,” Gibbons said and a decision will be made in the next several weeks. A special session would be asked to make reductions in government but the governor added, “I don’t like the idea of layoffs.”

Any special session would be after the November election. The regular legislative session starts in February 2009.

The governor also announced the creation of the Housing Recovery Act Implementation Task Force. It will work with local governments on spending the $72 million the state will receive from the Housing and Economic Recovery Act to deal with foreclosures.

“We have to lead Nevada through a housing rescue effort,” he said. “It’s critical that we have a coordinated effort to leverage and maximize these dollars to achieve the greatest impact.”

The first meeting of the task force is Oct. 22.

The governor said he isn’t optimistic that much of the $700 million bailout money passed by Congress will filter down into Nevada. To ward off the rising unemployment, the governor said a major effort will be made to draw more business to Nevada. But other states are doing the same thing.

For this fiscal year so far, the taxes collected from gambling are down 10.3 percent to $165.6 million, against a projected $184.6 million. But the sales tax, one of the major contributors to the state, is up 1 percent but below the forecasts.

However the governor said, “Now is not the time to panic. We have got to stay the course.”

It’s also not the time to raise taxes, he said. It’s a time to continue the low tax rate, ease the permitting system for new business and a time for government to help new industry to choose Nevada.