How Nevada was set on the path to this budget nightmare

Sunday, Jan. 11, 2009 | 2 a.m.

A Republican governor confronting a cataclysmic downturn in the economy might describe the state of the state thusly:

“My fellow Nevadans, it is my duty as governor to report this evening that the state of our state is fragile and as challenging as any period ... Since I last stood before you, much has happened to weaken the finances and the economies of our country and this state. That is why, this evening, Nevada stands at a crossroads. Directly ahead of us are two roads to the future. Tonight is the time for choosing our path. One choice may be easy to make, but hard to endure. It is a road that is shortsighted and paved with irresponsibility. The legacy of once again running from our duty as leaders will produce a devastating effect on every single Nevadan.”

So have I obtained an advance copy of Gov. Jim Gibbons’ State of the State speech, which he will deliver Thursday? Despite my special place in Gibbonsworld, alas, no.

But a Republican governor did say those words six years ago, facing a situation that may not be perfectly analogous — the economy is significantly worse now — but has forced similar choices.

Kenny Guinn could have done what Gibbons is poised to do — cut hundreds of millions from state government, schools and the higher education system by imposing pay cuts and erasing raises, choices that will leave school districts in legal and economic jeopardy because of binding contracts.

But Guinn did not take the road more easily traveled. He gritted his teeth and proposed a billion-dollar tax increase, much of which passed and served only to stop the further deterioration of state spending on education, social services and physical infrastructure.

Guinn, in his 2003 State of the State, had simple words to describe the other path, the one that would greatly damage the lives of seniors, children and the less fortunate: “These are not threats, they are realities ... To me, this is not a choice worthy of our citizens. It is not a choice for leaders, but a choice of political cowardice.”

Six years later the choice many Nevadans made for Guinn’s successor may have been easy to make but has now become hard to endure. Gibbons is poised Thursday to apply the same blunt instrument to the budget crisis that he has used throughout, eschewing a scalpel for a broadsword, preferring amputation to reconstruction.

“If I had to build this budget on only our existing revenue, I could not live with myself, and I don’t know anyone who could,” Guinn said six years ago.

Now you do, Gov. Guinn. His name is Jim Gibbons.

But let’s be fair. The governor is an unserious man with incurable myopia, but we are not here because of Jim Gibbons. He is hardly to blame for years of neglect, much of it hardly benign, by many self-centered players.

A political class looking ahead to the next election and unwilling to take on the larger problem of a tax system with an inherent structural deficit. A gaming industry that paid lip service to the notion of community responsibility but spit on the proposition that its taxes should be regularly increased. And a business elite that salivated at the profits to be made in a boomtown but whose throats dried up when asked how much they would contribute to the state’s coffers.

If Carson City politicians actually had engaged in a vigorous debate about how the state raises and spends money, if the gamers had agreed to have their taxes raised more often and if the business community had not serially removed its chair from the tax discussion table, we would not be here now. Don’t misunderstand: The national recession would still have hit home. But it would have been better to be cutting from funding levels at or above the national average in a state that had shucked its backwater tendencies than to be slicing bone from bone.

The blame game is hardly productive, though, unless it is instructive, too. This is not, as the ideologically blinded forces of the right and their tools would you have believe, simply a binary choice about taxes. Guinn knew that. But he had something that Gibbons — and alas, other state leaders, elected and otherwise — does not possess: A vision.

In 2003 a congressman named Jim Gibbons publicly criticized that vision. Now, the circle has closed. It’s time for Guinn — and so many others, elected and otherwise — to stand up and tell the public what they think of the Gibbons plan.

Discussion: 21 comments so far…

By JohnF

1/11/09 at 6:42 a.m.

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Amen to that, brother.

I can tell you what I think of the Gibbons plan: it stinks.

Mississippi is now the Nevada of the South.
By jfnance32

1/11/09 at 8:05 a.m.

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Nevada is nowhere close to be in bad shape of Califorina which has high taxes and a broad based taxes like corportate and income taxes.

If you want that model than move there.

Raising taxes will result in more private employeees being laid off.

I am sure that Sun, Ralston and Democrats shed no tears for that.
By KillerB

1/11/09 at 8:32 a.m.

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jfnance32 -- You are absolutely right on with this, and every word except for the last line.

The threshold economic principles involved here are about as complicated as balancing one's checkbook -- don't spend more than you have, and tighten your belt when you don't have it to spend. Until government learns now to cut out the fat before the essential services (infrastructure and necessary policing) it's hard for this citizen to take anything it says on this subject seriously.
By bdover

1/11/09 at 1:19 p.m.

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It's amazing how any discussion of our state budget seems to be dominated by grumpy old people who couldn't care less about education. Basically, they got theirs, and screw you, it's not their problem now. "Damn kids today should appreciate what they get. You can always work at Wally World or for tips-Right? My parents went through the depression...and on and on."

I'm an old fool, too, but this state and the governor are a disgrace. We need to raise the needed revenue to bring this state into the 20th century-yes, we're in the 21st, but we have to start somewhere.
By KillerB

1/11/09 at 2:58 p.m.

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bdover -- You'd better look deeper. Every session the legislature passes a record education budget, yet since the 70s the schools still can't seem to produce graduates who can at least read, write and do their sums. More money does not guarantee a better education.

And by the way, grumpy old people had less money spent on education on them than the current students, even adjusted for inflation.
By harske

1/12/09 at 6:45 a.m.

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Killer, I have an uneducated question for you since you seem to know. When you say "record" education budget... do you mean a national record, or a record for Nevada? I think you mean record for this state, and if so, just because it's a record for this state doesn't mean it's nearly enough. You're right in that more money doesn't equal better education, but when you're almost last in the Union on education spending, "more" is relative.

And those grumpy old people who didn't have as much education spending had many more solid manufacturing and factory jobs than there are now. Those didn't require nearly as much higher education as the technology industries that exist now. Unless this country goes back to actually producing goods, it's an apples and oranges comparison. Higher education is a much larger sperator now than it was previously.

Nevada, and Las Vegas in particular, have historically always been very shortsighted. There was no real pressure over the past 20 years to worry much about the budget because the gaming tax revenue was increasing faster than the state could spend it, so most of the powers-that-be got fat, dumb, and lazy. When all of your eggs are in one basket it's a pretty precarious position. And when that basket is predominantly driven by discretionary spending, any hiccup in the state or national economy will be magnified tremendously.

The time for action on the situation was ten years ago. But who would have thought it possible for things in Nevada to actually go down (gasp!)? Some simple contingency plans would have probably sufficed, at least in the early stages. Shame on them for not even considering any. And shame on us for electing dolts that don't have any.
By johnevegas

1/12/09 at 7:16 a.m.

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"Raising taxes will result in more private employeees being laid off.

I am sure that Sun, Ralston and Democrats shed no tears for that."

Do you see the disconnect there? Point 1. - logical. Point 2. - Nonsense. Why would the Sun, Ralston or Democrats not shed tears over layoffs?

To me this whole argument is about taxing or deficit spending. Neither one is a great choice. So why act like one is good and the other isn't?

By the way, on your California arguments, I'll just point out that in spite of greater taxes, the state is vastly more successful than Nevada, and in fact feeds Nevada with funds daily without which our state would instantly collapse.

Put succinctly, Nevada thrives because of California, not because we have lower taxes. Other than that, we are superior. Well maybe except for culture, diversity and opportunity too. But that's it for sure. Oh..wait...
By KDR81

1/12/09 at 8:32 a.m.

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A structural deficit is a nonsensical term, it is only the difference between what Jon Ralston et al want to spend and reality.

And there is nothing difficult about raising taxes - other thank ticking off the public (which is why government often figures out how to trick the public into paying the taxes).

Increasing taxes lets the government off the hook for having to make adult choices. From having to innovate or become efficient. The easy path is a tax increase.
By KDR81

1/12/09 at 8:35 a.m.

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JohnyVegas,

California spends more than $1,000 per pupil more than us and Nevada's 4th graders beat California 4th graders by 3 points on the NAEP readign exam.

What California beats us on is blowing money.
By johnevegas

1/12/09 at 8:56 a.m.

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"What California beats us on is blowing money."

That's one way to look at it, and yet my comparison still holds.

Government is wasteful, there I agree. But you said taxes would make us more like California, which was presumably bad, and that's what I was addressing. California may waste money, but they feed us.

I do think however that California CAN tax it's citizens more than we can. There is much more to draw people to California and keep them there. That's an offset many are willing to pay for. Obviously.
By George

1/12/09 at 9:15 a.m.

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"Raising taxes will result in more private employeees being laid off."

If you think cutting State salaries won't result in more private employees being laid off, go to Carson City in August/September and see how many businesses have closed for lack of State employee expendable income.

We're all in this together.
By honeybee

1/12/09 at 10:59 a.m.

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The Governor is taking a hit for our current fiscal woes. Unfortunately, some of our woes are his fault and his alone. He has spent his political capital supporting the good ol' boy system about which most of us who live in Nevada are keenly aware. For example, he has allowed some in "leadership" positions to remain there because of their political connections (see: Administrator of DCFS who did not complete high school but is married to the Governor's good friend, Perry Comeaux, and who's over $100K annual salary is being paid by all of the taxpaying citizenry...this, while children are dying and languishing in the foster care system and the state is facing a potentially multi-million dollar class action lawsuit as a result). I, for one, don't mind at all paying highly qualified and competent professionals entirely their worth...but asking state employees to take a hit when the Governor refuses to hire the best available for these positions is both an insult and wrong-headed. Hire the best there is out there, work on developing and implementing cost-effective, customer service centered, effacious programs, and I suspect we as taxpayers will support you, Governor Gibbons. Otherwise, you're on your own.
By azsk8fan

1/12/09 at 11:07 a.m.

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I just have one question - how much of a pay cut did Gibbons inflict upon himself?
By KDR81

1/12/09 at 3:34 p.m.

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Johny,

That shouldn't be an excuse to increase taxes but should be a clue to what harm taxes can cause.

You're right, California has a lot more to offer than Nevada. The only reason any of us are here is because policy makers many years ago realized we live in a desert and the only way to compete, to get people out here, was to offer them something they couldn't get anywhere else: a government that stayed out of their pocketbook.

Even if Nevada suddenly became a tropical rain forest with temperatures that hovered at 80 all year long, we should all still fight against tax increases"especially if the government hasn't shown any accountability with the money we've given it already.
By johnevegas

1/12/09 at 4:53 p.m.

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"Even if Nevada suddenly became a tropical rain forest with temperatures that hovered at 80 all year long"

Well that would certainly help my home value a lot!

In all seriousness, it's either taxes or deficit spending. I prefer taxes over deficit spending. Just like I prefer to use cash or Amex over the Visa. It keeps me from spending money I do not have.
By MysterMr

1/12/09 at 5:55 p.m.

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How? Public employee unions, lack of accountability, conflict of interest with some legislature members and their regular jobs.

That's how.

Oh, and let's not forget the Millennium Scholarship train wreck. That certainly contributed.
By pbud33

1/12/09 at 7:37 p.m.

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Raising taxes is never a good thing. We as citizens have blindly accepted the taxes in Nevada without expecting accountability. Mostly, IMHO, is because the times have been very good for most of us. The government always uses the excuse that their is no state tax.

The problem is that the money has been long abused. I agree with the writer above:

"The threshold economic principles involved here are about as complicated as balancing one's checkbook -- don't spend more than you have, and tighten your belt when you don't have it to spend. Until government learns now to cut out the fat before the essential services (infrastructure and necessary policing) it's hard for this citizen to take anything it says on this subject seriously."

Its time to cut all but essential services. Those sucking up a government paycheck or government subsidy will have to learn a new trade, or learn somthing that will make them "essential" when times are tough. It should be run like business, no money, no pay. No new taxes to pay for what is not essential.

Schools: Cut all the non-essential stuff. Cut out all of the unnecessary middle-managers, and give substantial pay raises to the teachers that deserve it. It is obvious that many of the bad teachers were promoted to created management positions, because of tenure, not performance. Eliminate these people and positions. Start paying teachers extremely good wages, based on performance, not tenure. Things will change in the schools faster.
By NoNevJim

1/12/09 at 9:38 p.m.

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It's a shame that Governor Gibbons has possessed a hunker down bunker mentality and not presented himself for any interviews via network or print news. If he didn't have such an adversarial relationship with everyone (even with Krolicki for cryin' out loud!) maybe he could solve this budget mess without pissing everyone off. At least Barbara Buckley has some face time with citizens and others to hear them out. Gibbons relies on the SAGE commission. SAGE - Screw All Government Employees!
By morgen

1/12/09 at 10:06 p.m.

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Compare California's higher ed system to Nevada's. Are you all laughing already? Do we need to say more?
By nvwilnd

1/13/09 at 10:10 a.m.

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MEDIA ADVISORY- THIS INFORMATION IS NOT FOR PUBLICATION

EMBARGOED NEWS MEDIA BRIEFING

GOVERNOR JIM GIBBONS TO GIVE SPECIAL BRIEFING ON PROPOSED BUDGET

(Carson, City, NV) A special briefing to provide the news media with detailed information about the Governor's proposed budget will be held Thursday morning. Staff members from the Governor's Office, the State Budget Office, and certain department directors will be on hand to explain the proposed budget and take questions.

ALL INFORMATION, VIDEO, AND AUDIO FROM THIS BRIEFING ARE EMBARGOED UNTIL THURSDAY EVENING AT 6:01PM.

WHO: Governor's Chief of Staff Josh Hicks, Budget Director Andrew Clinger, certain other directors and department heads.

WHAT: Briefing on Governor's proposed budget
WHERE: Old Assembly Chambers, Second Floor, State Capitol, Carson City
WHEN: 9:00 AM, Thursday, January 15, 2009

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